The Employer Identification Number (EIN), also known as the Federal Employer Identification Number (FEIN) or the Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities operating in the United States for the purposes of identification.
When the number is used for identification rather than employment tax reporting, it is usually referred to as a Taxpayer Identification Number (TIN), and when used for the purposes of reporting employment taxes, it is usually referred to as an EIN. These numbers are used for tax administration and must be not used for any other purpose. For example, the EIN should not be used in tax lien auction or sales, lotteries, etc.
An EIN isn’t a tax or legal requirement for every business, but even so, there are several advantages to applying for one. An EIN gives you flexibility as you add employees, take on clients, or otherwise grow your business. Administratively, an EIN makes it easy to apply for a loan or open a business bank account.
