No automatic penalty
There is no fine for not holding an EIN. What changes depends on your structure — a sole proprietor can trade for years without one.
Key takeaways
Sole proprietors can bank on an SSN
The federal customer identification rule asks for a taxpayer ID number, and an SSN satisfies it. An LLC or corporation is normally asked for its own EIN.
Backup withholding hits first
Leave the number off a W-9 and the payer starts withholding 24 percent immediately, and keeps withholding until you provide one.
Ask whether you need one
Two minutes on the phone settles whether this is urgent or whether you can leave it. We will tell you if the answer is leave it. Call (212) 641-0673 or use the contact form.
Open evenings and weekends.
The bottom line
Skipping an EIN is not an offense, and carries no penalty
Skipping an EIN is not an offense and carries no penalty, which is why plenty of sole proprietors have never held one. What it does is close doors, and which doors depends on how you set the business up.
01Business banking
Can I open a business bank account without an EIN?
Often yes, and whose name the account is in decides it. Under the federal customer identification rule, a bank opening an account for a US person needs a taxpayer identification number. An SSN is one.
Not sure whether your account needs one?
Tell us who owns the business and we will say. Call (212) 641-0673.
A sole proprietor
You are the customer rather than the business, so your SSN meets the rule. A business checking account without an EIN is normal for a sole proprietor.
An LLC, corporation, or partnership
The entity is the customer, and in practice banks ask for an EIN even where a disregarded LLC could give the owner’s number.
Applied but not received
Under the rule a bank can open the account on evidence that you have filed the application, and collect the number within a reasonable time afterwards.
The bank still gets the last word
All of that is a legal minimum rather than a promise. A bank can set a stricter policy, and many do — that is where the “most banks require an EIN” advice comes from. The 2025 exemption is optional too, so two banks can lawfully ask for different things on the same day.
Why two banks ask you for different things
Since 2025, federal exemption orders have let covered banks collect part or all of your taxpayer number from a third party rather than from you before the account opens. The bank still has to have the number — only where it comes from has changed.
You have employees
Wages mean employment tax returns, and you file those under an EIN.
You are a corporation or a partnership
Form 1065 and the 1120 series go under the entity’s number. A multi member LLC is a partnership for this purpose.
You file excise tax returns
Fuel, wagering, heavy vehicle use and the rest fall outside income tax and need their own number.
You withhold tax on payments to a non-US resident
For anything other than wages, you report that withholding under an EIN.
You run a Keogh plan
This type of retirement plan generally needs its own EIN.
03Friction, not fines
What skipping an EIN costs
None of these is a fine. They are friction, and the first one costs money.
Backup withholding at 24 percent
Leave the number off a W-9 and the payer starts withholding straight away, and keeps withholding until you give them one. This is the only item here with a number attached, and it starts on the first payment. See Publication 1281.
Returns that stall
Where paper filing is permitted, a partnership or corporation can use “Applied For” in the EIN box, but e-filing needs the real number. Any penalty is for lateness rather than the missing EIN.
Your SSN on every W-9 you send
A sole proprietor without an EIN hands a personal number to every client who asks. That is a disclosure decision, and it is the usual reason people get one they do not strictly need.
Platforms and vendors that will not take an SSN
Payment processors and marketplaces set their own onboarding rules, and plenty of them ask for an EIN whatever the tax law says.
Get the number before you need it
The application is free and takes minutes. The awkward moment comes when a client or a bank asks for the number today. Call (212) 641-0673 or use the contact form.
No charge for the conversation.
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04FAQ
If I don’t get an EIN FAQs
Is my EIN linked to my SSN?
Yes, on the IRS record. Form SS-4 asks for the responsible party’s SSN or ITIN, so the IRS knows who controls the entity. The numbers stay separate for filing, with the EIN on business returns and your SSN on your personal return.
Is it better to have an EIN or an SSN?
Neither is better, and you keep your SSN either way. An EIN sits alongside it for the business, and the practical reason to hold one is to keep your SSN off client paperwork.
Is there a downside to getting an EIN?
Two small ones. The IRS cannot cancel an EIN once it issues one, and you have to report a change of responsible party on Form 8822-B within 60 days. Neither is a reason to avoid one when a bank or a client is asking.
What happens if I get an EIN and never use it?
No fee and no penalty for the number itself. If the entity has a filing requirement, a partnership or corporation return is still due whether or not you used the EIN, and the IRS will deactivate the number on a written request if you no longer need it.
Can you run a business without an EIN?
Yes, if you are a sole proprietor with no employees and no excise tax returns. A partnership or a corporation cannot, because it files its returns under the entity’s number.
Can I get an EIN without a business?
Yes. Estates, trusts, household employers and nonprofits all hold EINs, and none of them is a trading business.
From the record
On planning ahead, and on getting the details right
“Make sure to start planning with a professional far ahead of time, maybe six months before, nine months before.”
George Dimov, CPA
“George provides outstanding, quality tax services from start to finish. As a new business owner, George helped me file my business and personal taxes with ease.”
Aliya H.
Google review
Get the EIN question settled
One quick call answers whether you need it
Send us your structure — sole proprietor, LLC, corporation, employees or not — and we will tell you exactly what an EIN would and would not change. Call (212) 641-0673 or send the contact form. No charge for the conversation.
Reviewed by George Dimov, CPA, New York, NY. Serving clients in all 50 states, 15+ years advising owners on entity classification, federal registration, and New York City and State tax. President of George Dimov, CPA, a New York City firm serving clients across the five boroughs and nationwide.