Most founders treat the EIN application as a checkbox. Submit form, receive number, file it away. That works, but it skips a useful question: what should already be done before the EIN is requested, and what should follow immediately after? Get the order right and the rest of the first year unfolds without surprises.
01What An EIN Actually Is
The Employer Identification Number is a nine-digit federal tax identifier issued by the Internal Revenue Service. It is the company's equivalent of a Social Security number. The EIN identifies the entity for federal tax filings, payroll reporting, banking relationships, and most state-level registrations. Once issued, the number stays with the entity for life. It does not transfer if the company is sold and it is not reused if the company dissolves.
The EIN application is free. It is filed online directly through the official federal portal, and most filings receive an immediate response with the EIN displayed on screen. There is no charge to apply, and any service that quotes a fee for "EIN assistance" is essentially charging for filling out a form the founder could fill out themselves in ten minutes. That is not a scam, but founders should know that the underlying government service is free.
The EIN is required for any company that has employees, files certain federal tax returns, or operates as a multi-member business entity. Single-member companies that have no employees and choose to be taxed as disregarded entities can technically operate using the founder's personal Social Security number, but doing so defeats much of the privacy benefit of forming the company in the first place. Most founders apply for the EIN regardless.
The Right Order For Setup
Sequence matters. Filing the right paperwork in the wrong order creates rework, delays, and occasionally permanent records that do not match each other. Here is the order most founders should follow when standing up a new company formation from scratch.
Step One: Reserve The Name
Before any filing, confirm the company name is available in the state of formation. Some states allow a name reservation that holds the name for thirty to sixty days while the rest of the paperwork is prepared. This is optional but useful when there is a gap between deciding on the name and filing the formation document.
Step Two: File The Formation Document
The Articles of Organization (or in some states, the Certificate of Formation) is the public document that creates the entity. It includes the company name, the registered agent, the principal address, and basic management structure. The state issues a confirmation, often within a few business days, and the entity legally exists from that point forward.
Step Three: Apply For The EIN
Once the entity exists, apply for the EIN. Doing this before the formation is filed is technically possible but creates problems. The EIN is tied to the entity name as filed with the state. If the state rejects the formation due to a name conflict, the EIN is now tied to a name that does not exist as a registered company.
"Sequence is strategy. Order matters more than speed."
Step Four: Open The Business Bank Account
Take the formation confirmation, the EIN letter, and the operating agreement to the bank. Open a dedicated business account. From this point forward, every dollar of business revenue and expense flows through this account exclusively. Mixing personal and business funds, even briefly, is the single fastest way to compromise the liability shield the entity was created to provide.
Step Five: Elect Tax Classification If Appropriate
By default, a single-member limited liability company is taxed as a disregarded entity, and a multi-member one is taxed as a partnership. Some founders elect S corporation taxation by filing the appropriate federal form within seventy-five days of formation. The election can save self-employment tax in the right circumstances, but it adds payroll complexity and is not appropriate for every business. This decision benefits from a conversation with a licensed accountant before filing.
Five steps. Each one builds on the last. Skip the middle and the end falls apart.
Common Mistakes Around The EIN
The most common EIN mistake is applying too early, before the entity is officially formed at the state level. This creates a record where the EIN exists but the company technically does not. The fix is straightforward but annoying, requiring a written request to update the entity record once the state filing is complete.
Another frequent issue is applying with the wrong responsible party. The application asks for a responsible party, defined as the person who controls or manages the entity. For multi-member companies, choose carefully. The responsible party is the contact of record for federal tax matters and changing it later requires its own form and waiting period.
A third mistake is treating the EIN confirmation letter as disposable. The official confirmation letter, often referred to as a CP 575, is the document banks, payroll services, and state agencies routinely ask for. Replacing a lost CP 575 takes weeks. Save it as a PDF, store it in the company's permanent records, and resist the urge to print and discard.
Finally, watch out for third-party services that charge a fee to obtain the EIN on the founder's behalf. The federal portal handles the application directly at no cost. Paying a third party is not inherently wrong, but it should be a conscious choice, not a confusion-driven default.
What Comes After The EIN
Once the EIN is in hand, the rest of the first-year setup falls into place. Open the business bank account. Set up basic accounting, even if it is just a clean spreadsheet for the first quarter. Decide whether the business needs a separate credit card for expense tracking. Register for any state-level tax accounts that apply, such as sales tax or employer withholding, depending on the business model.
Set a reminder for the first annual report deadline. Confirm that the agent of record is current and that contact information is correct in every state and federal record. These small acts of housekeeping take an hour total and save dozens of hours later.
For founders who want a fuller picture of the formation sequence, the role of an agent of record, and the privacy considerations baked into the public filing, the rest of the issue is back at the LLC Launchpad homepage. Read it before the next filing rather than after.
The Disclaimer
None of the above is tax or legal advice. Tax classification elections, in particular, are highly fact-specific and should be discussed with a licensed certified public accountant before filing. The federal forms referenced here are the official ones, and any consultant offering to file them for a fee is providing convenience, not unique access.