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FEIN vs EIN: What’s the Difference?

As a business owner or sole proprietor, you may have heard the terms Federal Employer Identification Number (FEIN) and Employer Identification Number (EIN) used interchangeably. Being in the new business world, it’s perfectly reasonable to ask yourself, “is a FEIN and an EIN the same?”.

As far as their functionality is concerned, there is no difference between a FEIN vs an EIN. They refer to the same 9-digit number issued to you by the IRS to identify businesses for tax purposes.

What is an EIN?

Anyone who is looking to employ someone to work for their business will need an EIN. This is a 9-digit number given to employers by the IRS which helps them determine your tax status and helps you keep your business and personal expenses separate. If someone asks for your state tax number, this is the number they are referring to. It also helps the IRS understand the nature of your business, given that you have to stipulate which industry your business operates within.  

What is a FEIN?

A FEIN is your Federal Tax Identification Number also issued to you by the IRS which allows you to file for payroll and make the necessary tax payments associated with your business. Your FEIN is used by the IRS to identify you as an active or potential employer in a similar way to how they identify individuals using the Social Security Number system. 

Who needs an EIN and what are they used for?

If you want to open up a business bank account or apply for a business credit card, organizations that provide these services will ask for your EIN upon application. This will help them accurately keep track of tax reporting for your business. 

If you have a business where sales tax applies, you will also have to have an EIN number specifically so that the state can implement their tax laws and make sure you are adhering to their criteria. In some states, tax laws can differ from federal laws. Your state-specific tax ID number therefore makes

Who needs a FEIN and what are they used for?

When you start dealing with clients, they will ask for your FEIN to be able to identify you as a legitimate business or service provider. You will also need to declare to the IRS that you are bringing in an income from your business, the tax technicalities of which can be ironed out using your FEIN. 

It’s also vital to have a FEIN if you plan on employing others in your business. This number will help you to register for payroll and make sure you are paying the right amount of tax according to the number of employees you have.

Does my business need an EIN vs FEIN?

If you are offering products or services as an operating business, you will need a FEIN. If the state asks for a tax ID number, you may need to have a separate EIN over and above your FEIN. However, in most cases, your FEIN vs EIN are the same numbers. 

The only major difference between a FEIN and an EIN is the context in which they are referred to. Essentially, when someone refers to an EIN when they mean a tax identification number, an EIN would be the tax ID number you use for state tax whereas a FEIN is used for national tax purposes. While a state ID number is an actual thing in some states. The terms FEIN & EIN are essentially synonymous. They’re the same thing and used interchangeably in the industry. 

If you work for yourself, it’s not as vital to have an EIN or FEIN as long as you do not take on employees. However, having an EIN or FEIN has many benefits which can help you with your personal and business expenses, income, and tax.

How do I get an EIN or FEIN?

The great thing about applying for an EIN or a FEIN is that the process is very simple. There are some companies that will charge you for acquiring an EIN number however it’s advised that you do this yourself, as the process should not take longer than 20 minutes. 

You can get your EIN or your FEIN by visiting the IRS website and submitting an application online. You will be able to access your EIN or your FEIN immediately. You will need to provide your company’s name, legally registered address as well as information about the industry in which your business operates. 

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