You have a Social Security number, a cell phone number, a driver's license number and a passport number. Do you really need a federal ID number, too? Maybe, if you have a business. Think of a federal ID number – also called an employer identification number or EIN – as the Social Security number for your business. You will need it if your business hires employees, opens a business bank account or pays certain types of taxes.
A federal tax identification number, also known as an employer identification number, or EIN, is a 9-digit number assigned by the IRS and used by them to identify a business entity for tax purposes.
What Is a Federal ID Number Used For?
If you operate a business, the IRS may require you to get a federal ID number, or EIN. It is the equivalent of a business Social Security number, used by taxing authorities to identify your business. Not every business needs one, but you'll need to get an EIN if you want to:
- Start a new business
- Hire employees
Use a tax-deferred pension plan
Open a business bank account
- Start a business line of credit
- Change the legal character of your organization
- Create a trust, pension plan, corporation, partnership or LLC
- Represent an estate that operates a business after the owner's death
How Do You Get a Federal Identification Number?
Getting a federal ID number is easier than remembering it afterwards. You can apply online at the IRS website as long as the business is located in the United States or its territories and you have a Social Security number. You'll get your EIN as soon as you submit the application. Or, you can apply by fax using IRS Form SS-4, and you'll get an EIN by return fax within four days. Mailing the SS-4 form is also possible, but you'll have a wait of about four weeks to get the number by mail.
The application is one page. Provide the name, address and phone number of the business, and the name and SSN of the responsible party. You must check a box to identify the type of business, such as a partnership, another box to indicate the principal activity of the business, like construction, and then answer a few questions about business activities. There is no fee to get an EIN.
Where Do I Find My Tax ID Number?
If you have applied for and received an EIN for your business, the number will be on your business tax filings as well as your business bank account and line of credit. If you have not applied for and received a federal tax number for your business, then you don't have one. But you can get one easily enough from the IRS.