Getting an Employer Identification Number (EIN) is usually one of the first steps after forming a business. While many applications are approved quickly, others are delayed or rejected because of simple errors. Understanding the most common issues can help you avoid unnecessary setbacks and get your business up and running sooner.
Common Reasons an EIN Application Is Rejected
1. The Business Name Doesn’t Match
The legal business name on the EIN application must exactly match the name registered with the state. Even small differences, such as punctuation or abbreviations, can create problems.
2. The Entity Type is Incorrect
Choosing the wrong entity type can cause processing issues and may lead to additional tax filing complications later on. Make sure your application reflects how your business was formed.
3. Responsible Party Information is Incorrect
The IRS requires accurate information for the responsible party. An incorrect name, mismatched taxpayer identification number, or missing information can delay processing.
For foreign owners without a SSN, there are additional requirements that you need to follow carefully.
4. Duplicate Applications
One of the biggest cause of delays is submitting multiple EIN applications for the same business. If you don’t receive an immediate response, avoid applying again until you’ve confirmed the status of your original application.
5. Mailing Address Issues
Using an address that can’t receive mail or entering an incomplete address can create issues. It’s important to use a reliable mailing address where official notices can be received.
Read our posts on registered agents and FAQ here.
6. Formation Isn’t Complete Yet
For corporations and LLCs, the business should generally be fully formed before requesting an EIN. Filing too early may result in inconsistencies between the IRS and state records.
What Happens If Your EIN Application Is Rejected?
A rejected application doesn’t always mean you can’t obtain an EIN at all. In many cases, the issue can be corrected and the application resubmitted. However, repeated submissions with the same errors may lead to additional delays.
Depending on the reason, you may need to:
- Correct the information and reapply
- Contact the IRS to clarify the issue
- Wait for a pending application to finish processing
- Submit additional documentation if requested
How to Avoid Delays
Before submitting your application, verify:
- Your legal business name matches formation documents
- The entity type is correct
- The responsible party is correct
- Your mailing address can receive IRS mail
- Your LLC or corporation has been formed
- You haven’t already applied for the same business
Double and triple checking your application before proceeding can save you hours of trouble.
Concluding Thoughts
Obtaining an EIN is typically a straightforward process. But small mistakes can lead you to unnecessary delays. Whether you’re a U.S. resident or international business owner, making sure your application is accurate the first time can help you move forward with opening bank accounts, hiring employees, and meeting your tax obligations.
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