Most businesses have a federal identification number, also known as an Employer Identification Number (EIN), which is a nine-digit number assigned by the IRS. Acting as a Social Security number for the business, it is used for tax purposes and day to day business activities. If you are a starting a new business, the first step is to get a federal identification number.
Who Needs a Federal Tax ID?
Any business that has employees or is considered a corporation or partnership; files employment, excise or alcohol, tobacco and firearms tax returns; or has a Keogh plan (type of retirement plan) must also have a federal identification number.
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Involvement with certain organizations requires a federal identification number, including certain trusts, estates, real estate mortgage investment conduits (REMICs), nonprofit organizations, farmers' co-ops and plan administrators.
Having a federal identification number is a requirement for many regular business activities, including paying payroll, getting tax exemptions, attending trade shows, making wholesale purchases and more.
How to Apply
You can apply for your federal identification number online, by phone, by fax or by mail; if you apply online or by phone, the tax number is given immediately.
If questions remain about whether or not a federal identification number is needed, review the IRS document Understanding Your EIN (link below).