In one line
The federal tax number that identifies a US business, used the way a Social Security number identifies a person.
Also called a federal tax ID or a taxpayer identification number.
What it means in practice
An EIN is issued by the IRS and free to apply for. Businesses with employees need one, and most clients will ask for it on a W-9 before they set you up as a vendor.
Sole traders can invoice under a Social Security number instead, but an EIN keeps that number off every document you send. Put it in your business block on the invoice if your clients expect it.
Example. A client's accounts team asks for a W-9 with your EIN before they can issue the first payment.
Where it shows up on the paperwork
It goes in your business block near your name and address, alongside your other details. A client asks for it on a W-9 before they set you up as a vendor.
What goes wrong
- Putting a Social Security number on invoices you send to strangers when an EIN would do.
- Getting an EIN and then never using it on your paperwork, which confuses clients matching you to their records.
- Paying a service for one. The IRS issues an EIN free.
The tools for this
Related terms
- Tax invoiceAn invoice that shows tax charged on the sale, with the rate and your tax registration number.
- Form W-9The IRS form a US client asks you to complete so they can report what they pay you.
- VAT numberThe registration number of a business registered for value added tax, shown on tax invoices.
Common questions
Do I need an EIN to invoice?
No. A sole trader can invoice under their own name and Social Security number. An EIN keeps that number off your documents and is required once you have employees.
Where does the EIN go on an invoice?
In your business details at the top, labelled as your tax ID. Some clients will not process a first payment without it on file.