Why Each Entity Needs a Separate EIN
The IRS assigns one EIN per legal entity to ensure clear tax reporting and accountability. Here’s why two entities cannot share one:
- Each entity is treated as a separate taxpayer by the IRS.
- EINs are used to identify businesses for payroll taxes, income taxes, and compliance.
- If two entities share an EIN, it creates confusion, potential tax filing errors, and possible IRS penalties.
Situations Where a New EIN Is Required
You will need a new EIN if:
- You form a new legal entity (LLC, corporation, partnership).
- You change your business structure (e.g., sole proprietorship to LLC).
- Your business is sold or transferred to another party.
- You form a subsidiary or spin off a separate legal entity.
Even if the owners are the same, the entities must have different EINs if they are legally distinct.
What If You Accidentally Use the Same EIN?
Using the same EIN for multiple entities can result in:
- IRS notices or audits
- Confused tax obligations
- Banking and licensing issues
To correct it, contact the IRS Business & Specialty Tax Line at 800-829-4933. They can guide you in applying for a new EIN and correcting prior filings.
Final Thoughts
So, can two entities have the same EIN?
No. Each entity must have its own EIN, even if owned by the same person or group. This ensures accurate tax tracking, legal compliance, and proper business operations.
