Most banks require an EIN, but sole proprietors have one exception

Most banks will not open a business account without an Employer Identification Number (EIN), even if you are the only person in your business. The exception is a sole proprietor — someone who owns the business alone and has no employees — who can use a personal Social Security Number (SSN) instead. However, many banks still prefer an EIN even for sole proprietors, and getting one takes only a few minutes online and costs nothing.

The reason banks ask for an EIN is that it separates your personal finances from your business finances in the federal system. An EIN is a nine-digit number issued by the IRS that identifies your business the way an SSN identifies you. When you apply for a business account, the bank runs a background check and verifies your identity against that number. Without one, the bank has to use your SSN, which creates confusion if you later hire employees or change your business structure.

If you do not have an EIN yet and your bank requires one, you can get one the same day you apply for the account. The IRS issues EINs free of charge through their online tool, by phone, or by mail. Most people get one online in under five minutes.

Key Takeaways

  • Sole proprietors can use their Social Security Number to open a business account, but most banks prefer an EIN instead.
  • All other business structures — LLCs, partnerships, S-corps, C-corps — must have an EIN before opening a business account.
  • You can get an EIN free from the IRS online, by phone, or by mail, and the online method takes about five minutes.
  • Bring your EIN and a government-issued ID to the bank, along with your business formation documents if you have them.

Which business structures require an EIN

If you are a sole proprietor with no employees, you can use your SSN. This is the only structure that has this option. You will still need to bring proof that you operate a business — a business license, a DBA (doing business as) certificate, or even a business plan — but the bank will accept your SSN as your tax identifier.

Every other structure requires an EIN. This includes single-member LLCs, multi-member LLCs, partnerships, S-corporations, C-corporations, and nonprofits. If you have formed any legal entity at all, you need an EIN. If you have employees — even one part-time employee — you need an EIN regardless of your structure.

Some banks will open an account for a sole proprietor using an SSN but will ask you to get an EIN later if you hire anyone or change your structure. Others require the EIN upfront. Call your bank before you go in, or check their website under "business account requirements," to find out which policy they follow.

How to get an EIN before opening your account

The fastest way is the IRS online tool at irs.gov/ein. You will need your Social Security Number, the date you started or plan to start your business, your business address, and the type of business you run. The tool asks a series of questions about your business structure and what you do. It takes about five minutes, and you receive your EIN immediately on screen. You can print it or write it down right then.

If you cannot use the online tool, you can call the IRS at 1-800-829-4933. The phone line is open Monday through Friday, 7 a.m. to 10 p.m. Eastern time. A representative will ask you the same questions and issue your EIN over the phone. You will receive a confirmation letter in the mail within two weeks.

You can also apply by mail using Form SS-4, but this takes four to six weeks. Mail it to the IRS address listed on the form for your state. Use this method only if you cannot access the internet or phone, because the other two are much faster.

Bring your EIN to the bank along with your government-issued ID and any business formation documents you have — a certificate of formation for an LLC, articles of incorporation for a corporation, or a business license. If you just started and do not have formation documents yet, bring a copy of your business plan or a letter explaining what you do and when you started.

What to bring to the bank if you use your SSN instead

If you are a sole proprietor and the bank allows you to use your SSN, bring your Social Security Number, a government-issued photo ID, and proof that you operate a business. Proof can be a business license, a DBA certificate filed with your county or state, a business plan, or even a recent invoice or receipt showing your business name.

Some banks will also ask for a business address that is different from your home address. If you work from home, you can use your home address, but some banks prefer a separate mailing address or a virtual office address. Call ahead and ask what the bank accepts before you go in.

If you do not have a business license or DBA yet, you can still open the account — bring whatever documentation you have and ask the bank what else they need. Many banks will open the account on the spot if you can show a government ID and explain your business.

Banks that accept SSN for sole proprietors

Most national banks accept an SSN for sole proprietor accounts, including Chase, Bank of America, Wells Fargo, and Citibank. However, their policies vary on whether they require an EIN upfront or allow you to add one later. Some regional banks and credit unions are stricter and require an EIN for all business accounts, even sole proprietors.

The safest approach is to call your bank or visit their website and search for "business account requirements" or "sole proprietor account." Their FAQ or account opening page will tell you whether they accept an SSN or require an EIN. If they require an EIN, you can get one online in five minutes before you go to the bank.

If your bank requires an EIN and you do not have one, do not let that stop you from opening an account. The EIN is free and takes minutes to obtain. By the time you finish the online application, you will have the number in hand and can walk into the bank the same day.

What happens if you open an account without an EIN and later need one

If you open a sole proprietor account using your SSN and later hire an employee or form an LLC, you will need to update your account with an EIN. Contact your bank and ask them to add your EIN to the account. Most banks can do this over the phone or online in a few minutes. You do not have to close the account and open a new one.

If you change your business structure — for example, converting from a sole proprietorship to an LLC — you may need to close your current account and open a new one under the LLC's EIN. This depends on the bank. Some banks allow you to keep the same account and just update the tax ID. Others require a new account. Ask your bank what their policy is before you make the change.

The key is to tell your bank about the change as soon as it happens. Do not wait until tax time or until the bank notices a mismatch. Updating early prevents confusion and keeps your account in good standing.

Frequently Asked Questions

Can I open a business account with just a business license and no EIN?

Only if you are a sole proprietor and your bank allows you to use your SSN. In that case, a business license is proof that you operate a business. All other structures require an EIN. If your bank requires an EIN, you cannot open the account without one, but you can get one free online in five minutes.

What if I do not have a business address yet?

You can use your home address or a virtual office address. Some banks require a business address separate from your home, but many do not. Call your bank and ask what address they accept. If you do not have a permanent address yet, ask if you can update it later once you do.

Do I need an EIN if I am a freelancer or contractor?

Not if you are a sole proprietor with no employees — you can use your SSN. However, many banks prefer an EIN even for freelancers because it keeps your personal and business finances separate. Getting an EIN is free and takes five minutes, so most freelancers get one anyway.

How long does it take to get an EIN?

The online tool gives you an EIN immediately. The phone line takes about 15 minutes and you get the number the same day. Mail takes four to six weeks. Use the online tool or phone if you need the number before you open your account.

Can I use a temporary EIN while I wait for the official one?

No. The IRS does not issue temporary EINs. The online tool and phone line both give you the official EIN right away, so there is no waiting period. If you apply by mail, you will have to wait for the official number before the bank will accept it.