How Consulting Businesses Get an EIN: IRS Direct & Why You Should Skip the Fees
As a consultant (whether you're a life coach, strategy advisor, or HR expert), setting up your business correctly is key. An EIN, or Employer Identification Number, is your business's tax ID number. You need it for your dedicated business bank account, professional tax filings, and sometimes even for large client contracts. Getting one from the IRS is free and takes five minutes online. Don't pay a service to do what you can easily do yourself.
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The Quick Answer
Get your EIN directly from the IRS at irs.gov. It costs $0, takes five minutes, and you receive your EIN instantly. This means more time focusing on client acquisition and billable hours. Formation services that charge $50-$75 to obtain your EIN are doing the same thing you can do yourself in less time. For a consultant whose time is worth $100-$300 per hour, spending 5 minutes to save $50-$75 is a smart business move. The only reason to let a formation service handle it is if you want everything bundled in one transaction and are already paying for their premium package.
IRS Direct vs Formation Service: Side-by-Side
IRS Direct (irs.gov): $0 cost. 5 minutes. Instant EIN confirmation. Requires U.S. citizen or resident with SSN or ITIN. Best for nearly all U.S.-based consultants and coaches starting their practice. It's time saved that can be spent drafting client proposals or marketing your services.
Formation Service (ZenBusiness, Bizee): $40-$75 add-on. 1-5 business days. They apply on your behalf and forward the EIN. Best for non-U.S. founders who cannot apply directly, or consultants who are already bundling complex entity formation (e.g., C-Corp with multiple investors, which is rare for initial solo consulting). For most solo consultants, this is an unnecessary expense.
Phone Application: $0 cost. 30 minutes by phone. Best for anyone who cannot complete the online form, such as non-U.S. residents without an SSN/ITIN or those with specific application complexities. This might be relevant if you're a foreign-based consultant setting up a U.S. entity.
Step-by-Step: IRS Online Application
1. Go to irs.gov and search for the EIN online application or EIN Assistant. 2. Select your entity type (for most consultants, this will be "Sole Proprietor" if you haven't formed an LLC yet, or "Single-Member LLC" if you have). 3. Enter your consulting business information — legal name, state of formation, responsible party name and SSN. 4. Answer the brief questions about business activities. For consultants, this might involve selecting categories like "Professional Services" or "Other Services." 5. Review and submit. 6. Your EIN appears immediately on the confirmation screen. Save it as a PDF and keep it with your other vital business documents like your LLC operating agreement or client contracts. This letter is critical for opening your business bank account, applying for professional liability insurance, or setting up payment processing for clients. The application is available Monday through Friday, 7am to 10pm Eastern time.
When to Use a Formation Service for Your EIN
For most independent consultants and coaches, paying a formation service for EIN assistance is rarely needed. Consider it only if: you are a non-U.S. citizen without an SSN or ITIN and must apply by phone or mail (a more complex process), you have already paid for a comprehensive formation package that includes EIN service, or you simply prefer to handle all formation tasks through a single vendor for a unique, complex setup. Otherwise, for the vast majority of consultants, doing it yourself is the most efficient and cost-effective route.
Common Mistakes to Avoid
Do not apply before your LLC is formed: The EIN is assigned to your specific legal entity (e.g., your "Consulting LLC"). Ensure your LLC is officially registered with your state before applying for the EIN. Do not pay third-party websites that rank above the IRS site: These are resellers charging for a free government service. Many consultants fall for this, wasting valuable startup funds. Always go directly to irs.gov. Do not lose your EIN confirmation letter: Banks will absolutely ask for it when you open your business bank account (which you'll need for client payments). Government agencies and some larger corporate clients might also request it for tax purposes. If you lose it, call the IRS Business Specialty Tax Line (800-829-4933) to retrieve it, but saving the PDF initially saves you a future headache.
The Verdict
For your consulting business, do it yourself at irs.gov. It’s free, instant, and the process is no different from what a formation service does on your behalf. As a consultant, your time is a valuable commodity. The five minutes you spend getting your EIN directly is the best return on time in your entire business formation process, allowing you to quickly move on to client outreach, service delivery, and revenue generation.
How to Get Started
To get your consulting business's EIN, have your LLC's legal name (if applicable), state of formation, and your personal SSN ready. Go to irs.gov and navigate to the EIN online application. Complete the form, save your confirmation letter as a PDF, and store it securely with your other critical consulting business documents (like client agreements and insurance policies). You will need it immediately when you open a dedicated business bank account for handling client payments and managing your professional finances.
RECOMMENDED TOOLS
IRS EIN Application
Free, instant EIN directly from the IRS
ZenBusiness
EIN service available as an add-on to formation packages
Bizee
EIN obtainment included in formation packages
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FREQUENTLY ASKED QUESTIONS
Can I apply for an EIN before my LLC is approved?
Technically you can, but it is not recommended. The EIN should be tied to your legal entity name. Apply after your Articles of Organization are approved.
Do I need a new EIN if I change my business structure?
Sometimes. Converting a sole proprietorship to an LLC requires a new EIN. Adding or removing partners may require one too. Check with the IRS or a CPA when changing structures.
Is an EIN the same as a state tax ID?
No. Your EIN is a federal tax ID. Many states also require a separate state tax ID for sales tax or employer withholding. Your state's Department of Revenue handles state tax ID registration.
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