Do I need an EIN for a DBA? (2024)

Understanding tax IDs and business names

Does a DBA need an EIN? Not every business with a DBA(a "doing business as" designation) is required to obtainan employee identificationnumber or EIN, but business ownerswith employees, multiple-member LLCs, and corporations need an employee identificationnumber.To break this down further:

• EIN:A business's nine-digit federal tax ID. Many, but not all, companies require an EIN to make federal tax payments and file returns.
• DBA:Refers to "doing business as"—an unofficial business name. Businesses operate under a DBA to improve their branding and protect owners' privacy.

If a sole proprietor named Joseph Jones uses the dba “Joe's Taco Truck," he can register his business with a Social Security number (SSN). But if Joseph wants toexpandinto a multi-person business, he'll needto get an EIN to conduct business operate under Joe's Taco Truck, his DBA. In general, you need an EIN for a DBA if:

• Your business has more than one employee (not including contractors)
• Your company incursexcise tax liabilitieson certain goods or services
• You file articles of incorporation to restructure as a corporation

When you don't need an EIN for a DBA:

• Your company operates as a single-person (aka single member) LLC
• Youare a sole proprietorship
• You hire contractors but not employees

Read on to learn if you need an EIN and if you should get one for the official business name, the DBA, or both.

Does my business need a DBA?

This is a common question business owners have.Businesses aren't required to operate under a DBA. Consider a dba the same way you think of a person's nickname.Someone may have a personal name likeJoseph Jones and may be called “Joey" or “JJ," but they will only have one Social Security card listing their legal name. A business can likewise operate under different names but use one EIN.However, you can't use one EIN for multiple businesses.

Related:Is it better to have an LLC or a DBA?

What name should you use for tax purposes?

Most businesses needto apply for and receive a federal tax ID under a formal name for federal tax purposes. This formal or legal name depends on the company'slegal structure (business structure):

• In the case of asole proprietorship, it's the owner's full legal name.That is considered the business' legal name.
• With a limited partnership, corporation, or limited liability company, it's the name listed on the formation documents filed with the state.

After youregister with a tax ID, owners can choose to operate under one or more DBAs. Whether you pay taxes through an SSN or EIN, DBAs are your business nicknames, and therefore, you won't have a separate tax ID for a DBA.

Should I operate under a DBA?

With DBAs, owners can open bank accounts and credit cards under a preferred business name. They also improve visibility by presenting businesses as more professional. Finally, DBAs form a brand identity recognizable to vendors, customers, and competitors.

At the same time, dbas don't offer financial or tax benefits in and of themselves. The monetary advantages of an EIN apply whether or not a business runs under a DBA.

Overview of the DBA application process

Picking one or more names for your business is fairly simple. But once you've settled on a DBA name, you need to formally register it. These steps include:

1. Do preliminary research on your company's fictitious business name, also called a trade name. Make sure no other businesses use the DBA in your area. If it's in use, pick a fallback name for your fictitious name.
2. Register theDBA within your state of operation. To avoid fines, file your dba within 30 days of using the name. Bear in mind that registration fees may exceed $300.
3. Look into county and city registration requirements. While most businesses only have to register with their state, some local governments need you to file a fictitious business name statement with their city or county clerk's office.
4. While you don't have to register a DBA with the federal government, be sure to report any dbas on related tax forms.

Do I need an EIN for my business?

If your business is a corporation or partnership, whether under aDBA or not, the Internal Revenue Servicerequires you to have an EIN. While limited liability companies don't have their own tax classification,LLCs need an EIN, depending on how they are taxed. For example, sole proprietors and single-member LLCs without employees or excise tax liability don't have to obtain an EIN.

TheInternal Revenue Service websitedictates that you will pay taxes through an EIN if your business:

• Pays its employees
• Functions as a partnership or corporation
• Files tax returns related to employment, tobacco, alcohol, excise, and firearms
• Withholds taxes on income paid to a nonresident
• Uses a tax-deferred pension plan, otherwise known as a Keogh Plan
• Works with trusts, estates, real estate investment partners, nonprofits, farmers' cooperatives, or plan administrators

You can also decide if you need to get an EIN based on your business structure. Single-person businesses that don't file payroll taxes can file with a Social Security number. If you hire employees, pay payroll taxes, and file as an S corp or C corp, you need an EIN.

Taxes aside, many business owners find that they need an EIN to open a bank account, obtain a credit card, obtain a business license, or pay state or local taxes. And others choose to get an EIN to avoid using their personal Social Security numbers for business matters.

Frequently asked questions: EIN for DBA

• Do I need a separate EIN for each DBA?No, you will use the same EIN for a business and all its dbas.
• Can you get an EIN as a sole proprietor?You can, and many sole proprietors choose to do so for tax benefits and added privacy.
• Does aDBA need an EIN?There is no tax classification for DBAs. The company operating under aDBA needs an EIN unless the owner is a sole proprietor or runs a single-person LLC.
• Do you have to register DBAs through the IRS?While you don't have to register DBAs with the IRS, owners must report dbas on IRS tax forms.
• Can I get an EIN without a DBA?Yes, LLCs operating under the owner's name are eligible for an EIN.
• Do DBAs pay taxes?No, DBAs generate a registration fee with their home state but don't pay taxes. But the company or owners they represent do file with the IRS.
• Does a DBA need an operating agreement? This is how a DBA differs from a limited liability company:Only LLCs are required to have operating agreements.
• How do excise taxes play into DBAs and EINs? If your company incurs excise taxes on certain goods or services, you'll need an EIN for your DBA. Common federal excise taxes are on items such as cigarettes and soda.
• Is an EIN a public record? Yes.
• Is a DBA a legal entity? No, it's not a legal entity.
• Is it necessary to hire someone to help with the EIN process, or can I do it myself?According to the Small Business Administration (SBA), the IRS has an assistance tool thatwill guide you through questions and ask for your name, Social Security number, address, and your "doing business as" (DBA) name.Your nine-digit federal tax ID becomes available immediately upon verification. Services like LegalZoom can also help make the process easier.

EIN application process overview

There is no filing fee for getting an EIN for your business. If you choose to set it up on your own, you can follow these steps:

1. Open a freeIRS online applicationor print out a copy ofForm SS-4.
2. On the form, provide information about your business, including how it is structured, the number of employees, and your principal business activities.
3. Submit your online application on the IRS website. If you filled out Form SS-4, fax or mail it to the IRS
4. Wait for the IRS to respond. Online applicants will receive their EIN immediately. If you apply by fax, you'll receive your EIN within four business days. If you apply by mail, it can take four weeks. International applicants can only apply for an EIN by telephone or by mail.

Once the IRS issues your EIN,open a business bank accountand apply for any credit cards you may need. Getting this financial groundwork out of the way will let you focus on expanding your company. When tax season comes around, you should also meet with a tax adviser who can explain EIN deductibles and benefits.