Most businesses are required to acquire an Employer Identification Number (EIN), and they are easy to get. An Employer Identification Number (EIN)—also known as a Federal Employer Identification Number or a Federal Tax Identification Number—is a nine-digit number the IRS uses to identify a business entity. Think of it as a Social Security number for your business. It is also needed to open business checking accounts, apply for various licenses and establish accounts with vendors.

Businesses required to obtain an EIN include corporations, partnerships, nonprofit associations, trusts, government agencies and certain individuals or other business entities. In some cases, sole proprietorships are required to obtain one, unless they don't have employees and don't file excise or pension tax returns.

Obtaining your business's EIN is simple. It's issued by the IRS and can be applied for online, by fax or by mail. The process is free of charge and is immediate if done online.

Businesses need to obtain a new EIN when their ownership or structure has changed. Although it is not necessary when changing the name or location of the business or opening new locations, you may wish to visit the IRS to find out what actions are required.

Once an EIN has been assigned to a business, it becomes the permanent identification number and cannot be cancelled. The EIN will still belong to the business and can be used at a later date, should the need arise. If you determine you do not need the EIN, the IRS can close your business account.

Remember to check with your state to find out what type of identification number you may need for state purposes. Your state may have requirements for obtaining an identification number separate from your EIN.