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.
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.
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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).