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What Is An EIN

What Is An EIN?

The Federal Employer Identification Number (FEIN), also known as an Employer Identification Number (EIN), is a unique nine-digit number used by individuals and businesses to identify themselves for tax purposes to the Internal Revenue Service (IRS).

Most companies, including those that are foreign but do business in the United States, must apply for a FEIN. Here’s everything you need to know about FEINs, how to apply, and what they can do for your business. 

What Are FEINs Used For?

  • Filing Business Tax Returns: An FEIN is required for filing all of your business tax returns, including excise tax returns for alcohol, tobacco, firearms, etc. 
  • Hiring Employees: An FEIN is needed for payroll taxes if your company has employees. Your employees will also need your business’ FEIN when filing their taxes. 
  • Opening A Business Bank Account: A company can use its FEIN to open a business bank account or apply for credit cards in the company name. 
  • Securing A Business License: You typically need an FEIN when getting your business license in order to identify your business to all the necessary local, state, and federal government agencies. 

Who Needs An FEIN?

If you have a business that does business in the USA, even if you’re based elsewhere, you likely require an FEIN, although there are a few exceptions. 

You need an FEIN if you:

  • Are a partnership or corporation
  • Are an LLC
  • Are a nonprofit
  • Work with nonprofit organizations
  • Have employees 
  • Have to file excise tax returns

Who Doesn’t Need An FEIN?

Several types of businesses can function without a FEIN. You might not need an FEIN if you are: 

  • A sole proprietorship: You may be able to use your Social Security Number (SSN) for taxes unless you have a Keogh retirement plan, hire employees, or change your business structure.
  • A single Member LLC: You may be able to use your SSN. 
  • An S corporation: Passes profits, losses, deductions, and credits to shareholders, negating the need for a FEIN.

Why Do Tax-Exempt Organizations Still Need An FEIN?

For your organization to become tax exempt, you must apply for 501(c)(3) status, which requires an FEIN. Tax-exempt organizations also still need an FEIN to hire employees, open bank accounts, etc.

What’s The Difference Between FEINs And Other Federal Tax Identification Numbers?

All employers and employees need a unique number to file taxes with. These are several types of tax identification numbers, and some are known by multiple names.

Social Security Numbers (SSN)

Americans use their Social Security Number, which they acquire when born in the U.S. or after legal immigration, for tax purposes. Freelancers and sole proprietors may use their SSNs instead of EINs in most situations. 

Taxpayer Identification Numbers (TIN)

You can use a tax ID number interchangeable with FEIN. It refers to any number used for tax purposes.

Employer ID Number (EIN)

An EIN number is the same as an FEIN. However, some people prefer to include “Federal” because a department of the federal government gives it.

Individual Tax Identification Number (ITIN)

Certain resident and nonresident aliens and their dependents can apply for an individual tax identification number. It is like a Social Security Number in formatting and also begins with the number “9”. 

Applying For An FEIN

Business structures and locations impact who needs an FEIN and how they get one.

When Do Businesses Need To Apply For A New FEIN?

There are several situations when you need a new FEIN.

  • Change in business structure: sole proprietorships add partners or incorporate must apply for a new FEIN. Similarly, corporations that become or obtain a subsidiary, merge, or change to partnerships need to apply for a new FEIN. 
  • Ownership changes: You inherit or purchase a business.
  • Bankruptcy: When a sole proprietorship or corporation files bankruptcy, it needs a new FEIN.

How To Apply For An FEIN

Any person or business whose main office is in the U.S. can apply for an FEIN on the IRS website

Alternatively, you can fax or mail a completed Form SS-4. However, foreign companies must call 267-941-1099 between 6 a.m. and 11 p.m. (Eastern Time) Monday through Friday to complete the application process over the phone.

Using An FEIN Lookup Service

FEINs are necessary and useful for people and companies that do business in the U.S. Fortunately, the process to get one is easy to understand.

Use EINsearch for all your FEIN lookup, matching, and validation needs. Get access to millions of FEINs through our database.

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