EIN.

In plain English

An EIN, or Employer Identification Number, is a nine-digit number the IRS assigns to a business to identify it for tax purposes. You apply for free on the IRS website, and businesses commonly use it to hire employees, open a business bank account, file business tax returns, and form a corporation or partnership. A sole proprietor with no employees can often use their Social Security number instead, but many get an EIN anyway to avoid putting their SSN on client and vendor paperwork. Watch out for third-party sites that charge a fee; the IRS never charges for one.

01Why it matters

Most banks require an EIN to open a business account, and using one instead of your SSN on W-9 forms keeps your personal Social Security number off documents that pass through many hands.

02The math, step by step

A new freelance writer applies for an EIN on the IRS site in about 15 minutes and pays nothing. She then opens a business checking account and gives her EIN, not her SSN, on the W-9 forms her clients request, keeping her Social Security number private.

03What this is NOT

04Receipts

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