Yes, in most cases subsidiaries have their own EIN. The IRS specifically lists “a corporation’s subsidiary” as a situation that requires a new Employer Identification Number, and any subsidiary that files its own tax return, employs workers, or owes certain excise taxes must have a separate number.1Internal Revenue Service. When to Get a New EIN The one meaningful exception is a single-member LLC that qualifies as a disregarded entity, which uses the parent’s EIN for federal income tax reporting.
When a Subsidiary Must Have Its Own EIN
A subsidiary set up as its own corporation is a distinct legal taxpayer. It files an annual income tax return on Form 1120 under its own identification number. The IRS has no mechanism for lumping a corporate subsidiary’s income onto the parent’s return as though the subsidiary doesn’t exist, so a separate EIN is not optional.
The same goes for a subsidiary structured as a partnership, including any multi-member LLC with two or more owners. Partnerships file an information return on Form 1065 that reports income, deductions, and each partner’s share of the results.2Internal Revenue Service. About Form 1065, U.S. Return of Partnership Income That filing requires a unique EIN for the partnership itself, separate from the numbers used by its partners or parent companies.
One point of confusion worth clearing up: a subsidiary owned by a C-Corporation cannot itself be an S-Corp. Federal law limits S-Corp shareholders to individuals, certain trusts, and estates. Corporations are not eligible shareholders.3Office of the Law Revision Counsel. 26 U.S. Code 1361 – S Corporation Defined A corporate subsidiary of a C-Corp parent will be taxed as a C-Corp and will need its own EIN.
The Disregarded Entity Exception
The main exception to the separate-EIN rule is the single-member LLC wholly owned by a parent company. Under the federal default classification rules, a domestic entity with a single owner is disregarded as separate from that owner for income tax purposes.4eCFR. 26 CFR 301.7701-3 – Classification of Certain Business Entities The subsidiary’s income and expenses flow directly onto the parent’s own tax return.
When the parent is a corporation, the disregarded LLC’s activity appears on the parent’s Form 1120 as though it were an internal division. The subsidiary does not file its own income tax return and uses the parent’s EIN for that reporting.5Internal Revenue Service. Single Member Limited Liability Companies
When a Disregarded Subsidiary Still Needs Its Own EIN
Disregarded status only covers federal income tax. Several situations force even a disregarded subsidiary to obtain a separate EIN.
Employment taxes. If the subsidiary has its own employees, it must use its own name and EIN to report and deposit all employment taxes. That includes quarterly Form 941 filings, annual Form 940 filings, and W-2 statements. The rule applies to wages paid after January 1, 2009, and treats the disregarded entity as a separate employer for the full employment tax system.5Internal Revenue Service. Single Member Limited Liability Companies
Excise taxes. A disregarded subsidiary also must use its own name and EIN when registering for excise tax activities, paying and reporting excise taxes on Forms 720, 730, 2290, and 11-C, and claiming related refunds on Form 8849.5Internal Revenue Service. Single Member Limited Liability Companies
Electing corporate tax treatment. A single-member LLC can also choose to be taxed as a corporation instead of following the pass-through default. That election is made on Form 8832.6Internal Revenue Service. About Form 8832, Entity Classification Election Once effective, the subsidiary becomes a separate taxable entity, files its own Form 1120, and needs its own EIN for all purposes.
The QSub Election for S-Corp Parents
An S-Corporation parent that wholly owns a corporate subsidiary can elect to treat that subsidiary as a qualified subchapter S subsidiary, or QSub. Under the election, the subsidiary is no longer treated as a separate corporation for federal tax purposes. Its assets, liabilities, income, and deductions roll up into the parent S-Corp’s return, working much like a disregarded LLC.7Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined
The requirements are narrow. The parent must be a valid S-Corp and own 100% of the subsidiary’s stock. The subsidiary must be a domestic corporation that would otherwise qualify for S-Corp status. Foreign corporations, REITs, and regulated investment companies cannot be QSubs, and an LLC that hasn’t elected corporate treatment doesn’t qualify because the statute requires a corporation in the technical sense.7Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined A single-member LLC owned by an S-Corp is already disregarded by default and doesn’t need a QSub election.
Non-Tax Reasons a Separate EIN Matters
Even when the IRS lets a subsidiary share the parent’s EIN, the business world often doesn’t. Banks generally require a unique EIN to open a checking or savings account in the subsidiary’s name, keeping its cash flow distinct from the parent’s accounts. That separation carries legal weight. If a subsidiary’s finances are too intertwined with the parent’s, a court may pierce the corporate veil and hold the parent responsible for the subsidiary’s debts.
A subsidiary’s own EIN also appears on contracts, leases, and licensing agreements it enters independently. Using the subsidiary’s number on these documents reinforces its status as a separate legal entity. If the parent’s EIN shows up instead, it creates ambiguity about which entity is actually on the hook.
How to Apply
The fastest route is the IRS online EIN application, which issues the number immediately. The tool runs Monday through Friday from 6 a.m. to 1 a.m. the following day, Saturday from 6 a.m. to 9 p.m., and Sunday from 6 p.m. to midnight, Eastern time. One catch: you can obtain only one EIN per responsible party per day, so setting up multiple subsidiaries at once will span several days.8Internal Revenue Service. Get an Employer Identification Number
The alternative is Form SS-4 by fax or mail. Faxed applications typically produce an EIN within four business days. Mailed applications take roughly four weeks.9Taxpayer Advocate Service. Getting an EIN
Whatever the method, the application asks for the parent’s legal name and existing EIN, the new subsidiary’s legal name and address, and the reason for applying. The parent must name a responsible party, meaning the individual who controls the subsidiary’s assets and finances, typically an officer of the parent corporation. The IRS uses that person’s SSN or ITIN for verification. For a newly formed subsidiary, “Started a new business” is the standard reason selection.10Internal Revenue Service. Instructions for Form SS-4
What Goes Wrong If You Use the Parent’s EIN
Filing under the parent’s number when the subsidiary should have its own creates mismatches in IRS records. Income that should appear on the subsidiary’s return goes unreported there, and the parent’s return picks up income it shouldn’t. The IRS treats that as negligence or disregard of the rules, with an accuracy-related penalty of 20% of the resulting underpayment.11Internal Revenue Service. Accuracy-Related Penalty A substantial understatement on a corporate return triggers the same 20% penalty.
Beyond the penalty math, mismatched EINs cause cascading issues with employment tax deposits, W-2 filings, and state registrations. These problems compound the longer they go uncorrected, so it’s worth getting the EIN question right at the start.