What Is a Federal Employer ID Number? (& Do You Need It?)

If you’re getting ready for tax season, one of the first things you need is your FEIN, or Federal Employer Identification Number.

The IRS creates these numbers to identify your business, and most small business owners need an FEIN regardless of whether you manage employees or not.

Don’t know what your FEIN is? No problem. This post will explain what a FEIN number is, why you need one, and how to get it from the IRS.

What is a FEIN number?

A FEIN number is a federal employer identification number. The U.S. government uses this number to identify businesses for tax purposes. You need a FEIN if you have employees and/or are incorporated. If you don’t have employees and are a sole proprietor, the IRS will use the business owner’s social security number as a tax ID.

Your FEIN is important because it ensures your tax payments are attributed to your business. The IRS uses it to confirm that you are paying the right amount and are being taxed fairly.

You’ll also use your FEIN to pay taxes throughout the year. Most businesses pay quarterly estimated taxes, meaning you pay your taxes in increments – four times a year. You’ll need your FEIN to complete these payments, so you don’t miss a deadline.

What does FEIN mean?

FEIN stands for Federal Employer Identification Number. The IRS may also refer to it as an EIN or Employer Identification Number.

While FEIN and EIN seem similar, this is a small difference between the two.

What is the difference between FEIN and EIN?

For the most part, FEIN and EIN are used interchangeably. However, some states require a separate EIN in addition to the FEIN. The state EIN helps your local government identify state-level taxes for your business. That’s why looking up your state’s tax requirements is essential before applying for an FEIN.

Does my business need an FEIN?

The IRS says you need a FEIN (or EIN) to:

• Hire employees
• Operate a partnership or corporation
• Pay sales and excise taxes
• Change business structures or ownership
• Administer certain trusts, retirement plans, and estates

Suppose you plan on doing any of the actions above. In that case, you must form a legal business entity (LLC, partnership, corporation, or tax-exempt organization) before applying for a FEIN. You must register your business with your state’s Secretary of State office to do that. Most states will have a website dedicated to registering businesses online.

Whether or not you need a FEIN mainly depends on your business structure and whether you employ people. Here’s a quick checklist from the IRS to help you determine if you need an EIN.

• Does your business have employees?
• Do you operate as a corporation or partnership?
• Do you file any of these taxes: Employment, Excise, Alcohol, Tobacco, and Firearms
• Do you withhold taxes on income?
• Do you have a Keogh plan (retirement plan for self-employed workers)?

If you answered “yes” to any of these questions, you need an EIN.

There are also some cases where a FEIN is required to operate. This graphic highlights a few of those examples:

Once you have a FEIN, you must file the required tax returns associated with your business. If you’re still unsure if you need an FEIN, ask your tax accountant to confirm this information.

Now, let’s discuss how you can find your company’s FEIN or apply for one from the IRS.

What is my company’s FEIN?

To get a FEIN/EIN, you just need to apply on the IRS website. You’ll answer questions about your business type, and if approved, you’ll receive an EIN in minutes. Online applications are preferred, but you can also complete tax forms and submit them via mail.

You can apply for an EIN if:

• Your place of business is the U.S. or U.S. territories
• You’re the responsible party in control of the business entity (or you’re the authorized representative)
• You have the responsible party’s social security number

When applying for a FEIN/EIN, you must disclose the name and social security number of the party or person responsible for managing your business. Typically, this is the business owner, but it could be a partner or trustor. You must also specify your business structure, why you’re applying for a FEIN, and other information that authenticates you as the business owner.

Here’s what this form looks like and some of the questions that it asks:

Companies might need to change their FEIN/EIN if there is a change in business type, structure, or ownership. Changing the business name might require a new FEIN/EIN, so you might want to consult a tax attorney if that situation comes up.

How do I find my FEIN?

Once you have your FEIN, it’s important to keep this number handy. Most business owners pay taxes quarterly, so you’ll need it at different times throughout the year.

If you lose it, you can find yours by looking at old tax returns or calling the IRS support line at 800-829-4933. As long as you are authorized by your business, the IRS can find your FEIN for you.

When do I need my FEIN?

You’ll need your FEIN to prepare for tax season. It’s required in various forms, like:

• Form 940
• Form 941
• W-2
• W-3
• Schedule C
• Form 1096
• Form 8832
• Form 720
• Form 944
• Form 1065

Note: This is not an exhaustive list.

There are also several state tax forms that require your FEIN. Those forms vary based on your state and the structure of your business.

Start Tax Preparation Now

Business owners should prepare for tax season throughout the year. You might not need a FEIN/EIN, but if you do, applying online is an easy process. Consulting a tax attorney will be your best bet if you have specific questions.

DISCLAIMER: This article or any of its content should not be deemed as tax advice.

Source: Internal Revenue Service. (n.d.). Employer Identification Number. U.S. Department of the Treasury. Retrieved [Month Day, Year], from https://www.irs.gov/businesses/employer-identification-number