If you’re starting or running a business, you’ve likely encountered the term Federal Employer Identification Number (FEIN). It’s essential for tax compliance, hiring employees, opening business bank accounts, and meeting legal requirements for corporations, partnerships, and more.
In this blog, we’ll break down what a FEIN is, who needs one, and how to apply or locate it.
What is FEIN?
A FEIN, also known as an Employer Identification Number (EIN), is a unique nine-digit number the IRS assigns to identify your business for tax purposes. It’s also referred to as a Federal Tax ID.
FEIN is primarily used for tax filing and reporting purposes for businesses, similar to how a Social Security Number (SSN) identifies individuals. The FEIN helps the IRS (Internal Revenue Service) track an organization’s financial activity and ensures compliance with tax regulations.
Interestingly, sole proprietors can use their Social Security Number (SSN) in place of a FEIN.
What is the purpose and importance of obtaining an FEIN?
Obtaining an FEIN is important for businesses to operate legally in the U.S. It is required for tax filing, hiring employees, opening business bank accounts, and maintaining corporate compliance.
The purpose of obtaining an FEIN can be described as:
- Hiring and payroll: It is required to hire and pay employees.
- Tax compliance: FEIN is needed to file federal and state taxes, including employment and excise taxes.
- Business banking: This is required for opening business accounts, obtaining credit, and managing finances.
- Legal and corporate protection: It helps maintain corporate liability protection (e.g., LLCs and corporations).
- Identity security: It reduces the risk of personal identity theft by using an FEIN instead of an SSN.
What is the difference between FEIN and EIN?
A Federal Employer Identification Number (FEIN) and an Employer Identification Number (EIN) are the same thing. Both terms refer to the nine-digit tax ID assigned to businesses by the IRS.
There is no difference between them. Whether you say FEIN or EIN, you’re talking about the same essential number used for tax and business purposes.
Who needs an FEIN?
Certain businesses are required to have a FEIN to operate legally. You’ll need it if your business:
- Has employees – An FEIN is mandatory for payroll and tax reporting.
- Is a corporation or partnership – These entities must have a FEIN, even without employees.
- Files specific tax returns – Required for employment, excise, or alcohol, tobacco, and firearms tax filings, or if you withhold taxes for non-resident aliens.
- Operates as an LLC, nonprofit, estate, trust, or cooperative – These structures require an FEIN for tax and legal purposes.
How do you find a business’s FEIN?
There is no public database to look up a business’s FEIN. However, if you are an employee, the easiest way to find your employer’s FEIN is on your W-2 form, which you receive each year for tax purposes.
The FEIN is listed in Box B of the W-2.
If you don’t have your W-2, you can check if your employer provides online access to tax documents through a payroll portal. If not, the best option is to contact your employer’s payroll or HR department and request a copy of your W-2 or ask directly for the FEIN.
How can a business apply for a FEIN?
Applying for an FEIN is pretty simple, thanks to the IRS’s website. Having said that, you can apply for it through multiple mediums like online, fax, or mail; though online is the most preferred option.
Here are the steps for online application:
Step 1: Check eligibility
If you’re creating an LLC, partnership, corporation, or tax-exempt organization, make sure you are registered with your state first.
If you’re a tax-exempt organization, remember not to apply for an FEIN until your entity is legally formed. Failing to file required tax returns for three consecutive years may result in automatic revocation of tax-exempt status.
Your principal business must be in the United States or U.S. Territories to get an FEIN. Furthermore, the applicant must have a valid Taxpayer Identification Number (SSN, ITIN, or another EIN).
Step 2: Complete the Form SS-4 application
Visit the IRS website during operating hours (Monday to Friday, 7 a.m. to 10 p.m. Eastern Time) and complete the Form SS-4 application in one session.
There will be very clear instructions while filling out the form. Follow them, answer the required questions, and submit the application. Upon successful validation, you’ll receive your EIN immediately.
Obtaining an EIN is a free service provided by the IRS. Be cautious of websites that charge fees for this service.
Note: The IRS issues only one FEIN per responsible party per day to ensure fair treatment of all taxpayers.
What do you do if you lose a FEIN?
If you lose your Federal Employer Identification Number (FEIN), look for it on past tax returns, bank statements, business licenses, or payroll records. You must’ve received an EIN confirmation letter, so check there as well.
If you used your FEIN to open a business bank account, contact your bank for the number.
If you’re unsuccessful with the above, call the IRS Business & Specialty Tax Line at 800-829-4933 (Monday–Friday, 7 a.m. – 7 p.m. local time). The IRS representative will ask security questions to verify your identity before providing the EIN.
What are the differences between FEIN, SSN, and ITIN?
Here’s a table describing the differences between FEIN, SSN, and ITIN:
| Feature | FEIN (Employer Identification Number) | SSN (Social Security Number) | ITIN (Individual Taxpayer Identification Number) |
| Issued by | IRS | Social Security Administration (SSA) | IRS |
| Purpose | Identify businesses (e.g., LLCs, corporations) for tax purposes | Identify individual U.S. citizens, permanent residents, and temporary (nonimmigrant) workers | Identify individuals who are not eligible for an SSN but need to comply with U.S. tax laws |
| Who needs It | Businesses with employees, corporations, partnerships, certain LLCs, and trusts | U.S. citizens, permanent residents, and temporary (nonimmigrant) workers | Non-resident and resident aliens who don’t qualify for an SSN but have U.S. tax obligations |
| Format | XX-XXXXXXX (9 digits) | XXX-XX-XXXX (9 digits) | 9XX-XX-XXXX (9 digits, starts with 9) |
| Common uses | Opening business bank accounts, filing business taxes, and hiring employees | Employment, social security benefits, and individual tax returns | Filing tax returns, claiming tax treaty benefits |
| Requirement for LLCs | Generally required for multi-member LLCs; optional but recommended for single-member LLCs | Not used for LLC unless the LLC is taxed as a sole proprietorship and doesn’t have an EIN | May be required for foreign-owned LLCs where the individual owner needs to file U.S. taxes |
Wrapping up
A Federal Employer Identification Number (FEIN) is more than just a tax ID; it’s a key part of running a legitimate and organized business. Regardless of whether you’re hiring employees, opening a business bank account, or filing taxes, having a FEIN keeps everything running smoothly and helps separate your business from your personal finances.
If you’re starting a business, getting an FEIN should be one of your first steps. And why not? It’s free, easy to apply for, and necessary to stay compliant. And if you ever lose it, don’t worry, you can easily find it on past tax documents, bank records, or by calling the IRS.
At the end of the day, having a FEIN isn’t just about checking a box. It’s about setting your business up for success and security.
