Why an EIN is Required for Hiring
If you're hiring employees, you must have an EIN before their first day of work. No exceptions.
The IRS requires employers to have an EIN for:
- Withholding federal income tax
- Withholding Social Security and Medicare taxes
- Reporting wages on Form W-2
- Filing employment tax returns
- Making federal tax deposits
You cannot use your Social Security Number for payroll taxes - an EIN is mandatory.
When You Need an EIN
Employees vs Contractors
| Worker Type | EIN Required? |
|---|---|
| W-2 Employees | Yes, always |
| 1099 Independent Contractors | Only if other factors apply |
| Household employees (nanny, housekeeper) | Yes, if paying $2,700+/year |
Before first paycheck: Get your EIN before your first employee starts. You'll need it to set up payroll.
Types of Employment
You need an EIN for:
- Full-time employees
- Part-time employees
- Seasonal workers
- Temporary employees
- Family members on payroll
- Yourself (if corporation paying officer salary)
Employer Responsibilities
Federal Requirements
With employees, you must:
- Withhold federal income tax - Based on W-4
- Withhold FICA taxes - Social Security (6.2%) + Medicare (1.45%)
- Pay employer FICA - Matching 7.65%
- Pay FUTA - Federal unemployment tax (6% on first $7,000)
- File Form 941 - Quarterly employment tax return
- Issue W-2s - By January 31 for prior year
- Make tax deposits - Schedule depends on liability amount
State Requirements
Most states also require:
- State income tax withholding
- State unemployment insurance (SUTA)
- Workers' compensation insurance
- State employer registration
Getting Your EIN for Hiring
Information Needed
When applying, you'll provide:
- Business name and address
- Type of entity (LLC, Corp, Sole Prop, etc.)
- Reason for applying: "Hired employees"
- Expected number of employees in next 12 months
- First date wages will be paid
- Principal business activity
Application Process
| Method | Timeline | Cost |
|---|---|---|
| IRS Online | Immediate | Free |
| EINFile.org | 24-48 hours | $79 |
| IRS Fax | 4-7 days | Free |
| IRS Mail | 4-6 weeks | Free |
Step-by-Step
- Apply for EIN - Select "Hired employees" as reason
- Receive EIN - Print or save confirmation
- Register with state - State employer registration
- Set up payroll - Software or service
- Collect W-4s - From each employee
- Start withholding - From first paycheck
After Getting Your EIN
Immediate Next Steps
-
EFTPS Enrollment
- Electronic Federal Tax Payment System
- Required for federal tax deposits
- Enroll at eftps.gov with your EIN
- Takes 5-7 days to receive PIN
-
State Registrations
- State tax withholding account
- State unemployment insurance
- Workers' comp insurance
-
Payroll Setup
- Choose payroll method (software, service, manual)
- Set up deposit schedules
- Configure tax calculations
Payroll Options
| Option | Best For | Cost Range |
|---|---|---|
| Payroll software (Gusto, QuickBooks) | Small businesses | $40-100/month |
| Payroll service (ADP, Paychex) | Growing businesses | $100-200+/month |
| PEO (co-employment) | HR-intensive businesses | % of payroll |
| Manual (not recommended) | Very small operations | Time-intensive |
Employment Tax Deposits
Deposit Schedules
The IRS assigns you a deposit schedule:
Monthly Depositor (most new employers)
- Deposit taxes by 15th of following month
- For businesses with under $50,000 tax liability
Semi-weekly Depositor
- Deposit within 3 business days of payday
- For businesses with over $50,000 tax liability
Form 941
File quarterly to report:
- Wages paid
- Taxes withheld
- Employer share of FICA
- Due dates: April 30, July 31, October 31, January 31
Common Employer Mistakes
No EIN before first paycheck: Apply well before hiring date.
Missing EFTPS enrollment: Enroll immediately after getting EIN.
Late deposits: Penalties are steep - up to 15% of unpaid taxes.
Misclassifying employees: W-2 vs 1099 has serious consequences.
Not filing 941: Even with no wages, you may need to file.
Employee vs Contractor
Misclassifying workers is a common and costly mistake:
Employee Indicators
- You control when/where/how they work
- You provide tools and equipment
- Ongoing relationship
- Only works for you
- Training provided
Contractor Indicators
- Controls own schedule and methods
- Provides own tools
- Project-based relationship
- Works for multiple clients
- Specialized expertise
When in doubt, the worker is probably an employee.
Household Employees
Hiring a nanny, housekeeper, or caregiver? Special rules apply:
- EIN required if paying $2,700+/year (2024)
- File Schedule H with personal tax return
- State requirements vary
- Consider payroll service for compliance
Related Guides
By Entity Type:
- EIN for LLCs - LLC employer requirements
- EIN for Corporations - Corporate payroll setup
- EIN for Partnerships - Partnership hiring
Other Employer Needs:
- EIN for Business Banking - Payroll accounts
- What is an EIN? - Complete basics guide
State-Specific Guides:
- California LLC EIN - CA employer requirements
- Texas LLC EIN - TX employer requirements
- New York LLC EIN - NY employer requirements
Get Your Employer EIN Today
Ready to hire? We help businesses get their EIN quickly so they can start the hiring process. Apply through us and receive your EIN within 24-48 hours.