An EIN is an Employer Identification Number. It’s a number issued to your business by the IRS. I often explain to clients that an EIN is like a Social Security number for your business. Your company will need it to pay taxes, open a bank account, or hire employees. There’s some confusion surrounding EINs because they seem to go by a number of names: FEIN, Federal Tax ID, and EIN are all the same thing.
Do I need an EIN?
The IRS requires that you obtain an EIN if any of the following are true:
- Your business is a corporation or partnership;
- Your business has employees;
- Your business is going to pay Employment, Excise, or Alcohol, Tobacco and Firearms tax;
- Your business is going to withhold taxes for a non-resident alien;
- Your business has a Keogh retirement plan; or
- You’re “involved with” trusts, IRAs, Exempt Organization Business Income Tax Returns, Estates, Real estate mortgage investment conduits, Non-profit organizations, Farmers’ cooperatives, or Plan administrators.
How do I get an EIN?
The IRS maintains a free website where you can apply for an EIN. Editorial note: it’s quite terrible. If the responsible party for your business is a non-resident alien or a company that also received its EIN online, if your business name contains any special characters (like a plus sign), or if the responsible party doesn’t have a social security number or ITIN, you can’t use the online form. Also, for some inexplicable reason, the form can only be submitted during business hours.
If you can’t submit the form online, you will need to apply via fax. It can be a bit trickier for non-resident aliens, but it is possible.
I offer one final piece of advice: once you receive your EIN, don’t lose it! The only way to retrieve a lost EIN is by calling the IRS and typical hold times are one to two hours.