So, what is a FEIN? The Federal Employer Identification Number (FEIN), also known as an Employer Identification Number (EIN), is a unique nine-digit number used by individuals and business entities 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 a Business Tax Return: A FEIN is required for filing all of your business tax returns, including excise tax returns for alcohol, tobacco, firearms, etc.
- Hiring Employees: A 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 a FEIN when getting your business license in order to identify your business to all the necessary local, state, and federal government agencies.
Who Needs A FEIN?
Now you know what a FEIN is, it’s time to understand who needs a FEIN. If you have a business that does business in the USA, even if you’re based elsewhere, you likely require a FEIN, although there are a few exceptions.
You need a 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 A FEIN?
Several types of businesses can function without a FEIN. You might not need a 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 A FEIN?
For your organization to become tax-exempt, you must apply for 501(c)(3) status, which requires a FEIN. Tax-exempt organizations also still need a 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. There 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)
Employer ID Number (EIN)
An employer identification number, or EIN, is the same as a 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”.
How to Apply for a FEIN
Business structures and locations impact who needs a Federal Employer Identification Number and how they get one.
When Do Businesses Need To Apply For A New FEIN?
There are several situations when your business entity may 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 for bankruptcy, it needs a new FEIN.
FEIN application process
There are three main ways to apply for a FEIN, which include the following:
Applying for a Federal Employer Identification Number (FEIN) online is a straightforward process that can be completed in a few simple steps. To get started, visit the official website of the Internal Revenue Service (IRS) at www.irs.gov. Look for the “Apply for an Employer Identification Number (EIN) Online” page, which can usually be found under the “Businesses” section.
Once you’ve accessed the online application, provide the necessary information about your business, such as its legal name, mailing address, and responsible party details. Take the time to review the entered information for accuracy and completeness before submitting the application electronically.
The system will process your application, and upon successful submission, you will receive your FEIN immediately. It’s essential to save or print the confirmation notice for your records. The online application for a FEIN offers a convenient and efficient way to obtain your identification number for tax purposes, allowing you to proceed with your business operations smoothly.
To apply for a FEIN via fax, download Form SS-4, the Application for Employer Identification Number, from the Internal Revenue Service official website at www.irs.gov. Fill out the form completely and accurately, providing all the required information about your business.
Once completed, fax the form to the appropriate fax number provided by the IRS. It’s important to ensure legibility and clarity when faxing the form. The IRS will process your application and send your FEIN by fax within a few business days. Be sure to retain a copy of the fax confirmation for your records.
To apply for a FEIN via mail, visit the official website of the Internal Revenue Service at www.irs.gov and download Form SS-4, the Application for Employer Identification Number. Complete the form with accurate and comprehensive information about your business.
After filling out the form, mail it to the address provided by the IRS. Ensuring that the form is legible and includes all the necessary details is crucial. The IRS will review your application and send your FEIN by mail within a few weeks. Remember to retain a copy of the application for your own records.
Can you cancel your FEIN?
You can cancel your FEIN by submitting a written request to the Internal Revenue Service. To cancel your FEIN, write a letter explaining the reason for the cancellation and include your business name, FEIN, and the business owner’s signature. You should send the letter to the same IRS address where you originally applied for the FEIN.
The IRS will review your request and process the cancellation. It’s important to note that once a FEIN is canceled, it cannot be reactivated or reused for future businesses. Make sure to inform relevant parties, such as banks and government agencies, about the FEIN cancellation.
Using A 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.