What is a federal tax ID number or an EIN?

It’s almost impossible to run a business in the United States without a federal tax ID. You’ll need one to pay employees, claim benefits or file your taxes.

What is a federal tax ID?

A federal tax ID is a unique nine-digit number, assigned by the IRS, that identifies your company as a business operating in the United States. It’s like a personal Social Security number in the sense that each business gets one and no two are the same.

Federal tax ID vs. EIN

In short, an employer identification number EIN is the same as a federal tax ID, and the names are interchangeable. Occasionally, you may hear it referred to by another name or acronym. For example, sometimes it’s called a taxpayer identification number, or TIN. And it’s also known as a federal employer identification number, or FEIN.

Does my business need a federal tax ID?

Generally, yes. You’ll need a federal tax ID if you want to apply for a business checking account or a loan. According to the IRS, businesses also require a federal tax ID if they:

• Have employees
• Operate as a corporation, partnership or limited liability company
• File any of the following tax returns: employment; excise; alcohol, tobacco and firearms
• Withhold taxes on income paid to non-resident aliens
• Have a Keogh plan
• Are involved with certain types of organizations, including but not limited to trusts, estates, nonprofits, farmers’ cooperatives and plan administrators

Business entities that require a federal tax ID include:

• S corporations
• C corporations
• Limited liability companies (LLCs)
• Single-member LLCs
• Multi-member LLCs
• Nonprofit organizations
• Sole proprietorships with employees

Additionally, some trust agreements may require a federal tax ID. Most are reported under the SSN of one of the trustees, but some individuals and families with a trust may opt to use a separate EIN altogether. Estate accounts (generally established after an individual’s passing for the distribution of assets) will also require a federal tax ID, separate from the decedent’s SSN.

Even if your business is tax-exempt, you still must apply for an EIN. Upon applying for a federal tax ID, tax-exempt businesses have three years to prove their status.

How do I apply for a federal tax ID?

Once you’ve determined that you need a business tax ID, you’ll work with the IRS to receive one. You can apply online through the IRS website. If you’re uncomfortable sharing sensitive information online, you can also download and print out Form SS-4, then fax or mail it in.

A federal tax ID is free, so steer clear of any third-party websites that ask you to pay for an EIN.

To apply online, follow these three steps:

1. Make sure your business qualifies.

To qualify for a federal tax ID, your business must operate within the United States. As the business owner applying for the EIN, you must have a valid taxpayer identification number, such as a Social Security or individual taxpayer identification number. Check the list above to see whether your business qualifies for a federal tax ID.

2. Apply for only one federal tax ID (or EIN) per day.

You are limited to filing for one federal tax ID per day. If you are the only individual applying, you will be considered the responsible party for the business. The responsible party is the person who controls or owns the business entity and maintains the most control over business decisions.

3. Receive your federal tax ID.

If you’ve submitted your application with all the required information online, you should receive a response from the IRS soon after. You can view, download, save and print the confirmation notice — which includes your number — directly from the IRS website. If you submit your application via fax or mail, you may need to wait four or five weeks.

You can start using your federal tax ID as soon as you receive it.

FAQs about EIN or federal tax ID number

Is a federal tax ID or EIN number required?

Likely. A federal tax ID or employer identification number (EIN) is typically required for businesses, especially if they hire employees, operate as a corporation or partnership or meet other IRS criteria.

What happens if I lose my federal tax ID?

You can recover a misplaced federal tax ID by contacting the IRS Business and Specialty Tax Line at 800-829-4933. Alternatively, check previous tax forms or your IRS confirmation email for the number.

TIN vs. EIN: What’s the difference?

A taxpayer identification number (TIN) is a broad term that includes various types of tax IDs like Social Security numbers and employer identification numbers (EINs). An EIN, also known as a federal tax ID, specifically identifies business entities for tax purposes.

When do I need a federal tax ID?

A federal tax ID is required if you are starting a business that will hire employees, operate as a corporation or partnership or require a separate tax entity.

Do I need to change my federal tax ID?

You’ll need to change your federal tax ID if your business changes its structure (e.g., from sole proprietorship to corporation) or if there is a change in ownership or partnership.

What’s next?

Once you’ve obtained a federal tax ID, you can take steps toward achieving other business goals. Meet with a Chase business banker to learn what you can do to manage your finances.