EIN (Employer Identification Number)

An EIN (also referred to as an Employer Identification Number) is a nine-digit number that the IRS assigns in the following format: XX-XXXXXXX. It is also occasionally referred to as the federal tax ID or an FEIN. It can be thought of as something like a social security number for a business, although EINs aren’t assigned exclusively to companies (more on that below). It can be used to identify the tax accounts of employers and companies. EINs are used by employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, certain individuals, and other business entities. All companies, when they begin doing business, must apply for an employer identification number. Fortunately, the IRS allows the application to be submitted online. Applicants can obtain their employer identification number right away from the IRS when applying online, along with obtaining their official confirmation letter, which will be required by most banks for a company to open a business bank account. However, when a third party applicant, such as a lawyer, applies for an employer identification number online on behalf of a client, then the client must wait 2-3 weeks for the official confirmation letter to arrive in the mail. Overall, applying for and obtaining an employer identification number is an absolutely critical step to take for any new business in the US.