When forming a business entity such as an LLC, you’ll need to apply for a federal tax ID number—or employer identification number (EIN)—to file taxes and complete other business tasks. This nine-digit number is similar to a Social Security number and is issued by the Internal Revenue Service (IRS). It’s easy to apply, and all you need to do is fill out a one-page form online and submit it.
What is a federal tax ID number?
When someone refers to a federal tax ID, they’re generally talking about a federal employer identification number (FEIN). This tax ID serves the same purpose as an EIN, but it is at a federal rather than state level. This is why the terms EIN and FEIN are often used interchangeably.
What sets a FEIN apart from an EIN?
A federal tax ID and an EIN are the same thing. Some other words you may hear when discussing this are:
- Federal employer identification number (FEIN)
- Employer identification number (EIN)
- Taxpayer identification number (TIN)
- Federal tax number
- Federal tax ID
- Tax ID number
Types of IDs your business can use for taxes
If you don’t need a federal tax ID to identify your business, you can also use a:
- SSN: The Social Security Administration (SSA) issues Social Security numbers to help identify U.S. citizens for numerous purposes—including filing taxes— throughout their lives.
- ITIN: The individual taxpayer identification number is a tax ID the IRS issues to all non-U.S. citizens who work in the country but aren’t eligible to receive a SSN so they can still pay their taxes.
People who have a company outside of the U.S. generally rely on an ITIN to file taxes because they don’t have a Social Security number to meet the IRS’ identification requirements.
Meanwhile, those who run a sole proprietorship and don’t employ staff typically use their personal Social Security number since they have easy access to it and there are no laws that require them to obtain a FEIN, unlike larger businesses.
How to apply for a federal tax ID
If you determine you need to acquire a federal tax ID, be sure to apply at least two weeks before you actually need to use it. This gives the IRS enough time to file your new EIN number.
Besides that, it’s an easy application process, and you can complete it in five steps.
1. Confirm the prerequisites
If you already have a taxpayer identification number (TIN), it will be easy to apply for a new EIN application. Some qualifying TINs include:
- Social Security numbers (SSN)
- EIN (for another entity)
If you don’t already have one of these tax IDs, visit the IRS website to determine if you’re eligible. The standard qualifications include the:
- Business being located in the U.S. or one of its territories
- Applicant having a valid SSN, ITIN, or EIN
- Business not already having an assigned EIN
2. Collect information
Whether you’re the company’s responsible party or just filing on their behalf, you will need to input the following identifying information on the application:
- Taxpayer ID
- Company’s legal or DBA name
3. Choose your entity type
You can start the FEIN application by selecting the entity type that matches your company’s structure. Your options are:
- Sole proprietorship
- Church organization
- Limited liability company
- Nonprofit organization
- Personal service corporation
4. Fill out company details
You will start by documenting details about the company, including the following:
- Legal name
- Trade name/DBA (optional)
- Number of members
- Taxation status
- State it was opened in
- Reason for applying
- Primary activity
- Products and services (optional)
- Start or acquisition date
- Closing month of accounting year
You will also need to list the address of the company’s headquarters. This address cannot be a P.O. box.
5. Input managing member information
Once that’s done, you’ll input the information about the owner that you collected in step 2. These details will include:
- First name
- Middle name (optional)
- Last name
Who needs a FEIN?
Any U.S. business can use an FEIN, but if your company is a sole proprietorship and doesn’t have any employees, you aren’t legally required to have one. But you will still need to get an FEIN if you want to:
- Hire staff
- Change your business type
- Pay expats with non-salary compensation like tickets, discounts, or reimbursements
- Handle estates, trusts, or IRAs
- Get started with real estate conduits
- Open business credit cards
- Apply for business loans
- File excise taxes for tobacco, alcohol, or firearms
- Establish a nonprofit organization
- Have a Keogh plan
- Be involved with farmers’ cooperatives or plan administrators
Does a single-member LLC need a federal tax ID?
No, it does not. In cases like these, the individual who owns the company can use their Social Security number to file federal income taxes. They can also report any company activities on their tax return.
There is an exception that makes it necessary for a single-member LLC to get a Federal Tax ID:
If the single-member LLC is a “disregarded entity” that has staff and pays federal employment or excise taxes, the IRS treats it as a separate entity. This means it will need to have a tax ID number.
Replacements: Do you need a new EIN?
You may need to request a new FEIN from the IRS at some point. The factors that dictate this will largely depend on what type of entity your business is and the situations it finds itself in.
Typically, you only need to get a new EIN if the overall structure of your business changes. A simple change like a new name doesn’t warrant an update, but other qualifiers vary based on the type of entity you have.
You do need a new EIN if you:
- File for bankruptcy
- Operate under a partnership
- Buy or inherit a preexisting business
- Incorporate your business
You do not need a new EIN if you:
- Update your business’s name
- Change your address or add more locations
- Operate other businesses
A corporation is an entity created by a single person or a group of people using a charter that separates the owner(s) from personal liability.
Apply for a new EIN if:
- The secretary of state awards your corporation a new charter
- You form a new corporation following a merger
- The corporation transitions to a sole proprietorship or partnership structure
- You become a subsidiary of a corporation and use the parent company’s EIN
There’s no need to apply for an EIN if:
- You are classified as a division of a corporation rather than a subsidiary
- The corporation uses the existing EIN following a merger
- You declare bankruptcy
- The corporation moves or updates its name
- You choose to be taxed as an S corporation
- The reorganization of your corporation strictly changes its identity and place of operation
- You file corporate changes with the state but don’t change your business structure
A partnership is an unincorporated company with two or more owners who work together to carry out daily operations. Financial partnerships aren’t considered valid under this business structure.
You must get a new EIN if:
- You incorporate
- One partner takes over and turns the company into a sole proprietorship
- You end an old partnership to begin one with someone else
However, if any of the following are true, there’s no need to obtain a new EIN.
- The partnership declares bankruptcy
- You change the partnership name
- The company forms a new partnership due to the termination of the old one under IRC section 708(b)(1)(B)
- You move or add more locations
- 50% or more of company ownership (capital and profits) changes hands in one year
An LLC is a business entity created by state statute. Since LLCs are created under state statutes, they don’t have federal tax classifications, making them “disregarded entities”. That’s why a single member LLC is treated as a sole proprietorship and a multi-member LLC owned by another entity is treated as a branch of the larger company.
Aside from unique circumstances, your LLC will need to get an EIN if you:
- Form a multi-member LLC under your state’s laws
- Were required to fulfill the employment tax filing requirement for wages you paid on or after Jan. 1, 2009.
- Form a single-member LLC but choose to be taxed as a corporation or S-corp
- Have a single-member LLC that was required to pay excise taxes starting on or after Jan. 1, 2008.
Your LLC doesn’t need a new EIN if:
- You report income to a parent company that has to staff or excise tax liabilities
- Your partnership transitions to an LLC that is classified as a partnership
- The legal name or physical location of your LLC changes
- You already have an EIN for your LLC that is taxed as a corporation
- Your single-member LLC isn’t taxed as a corporation and has excise tax responsibilities or staff
Keep in mind that if you want an EIN for banking or state tax purposes, you can still apply for one. You just don’t need one for federal tax purposes.
You do need a new EIN if:
- A trust is not a continuation of the estate and instead takes funds from it
- You represent a business left behind following the owner’s death
You don’t need a new EIN if the administrator or executor changes their name or address.
Trusts carry out a series of actions and can either be irrevocable or revocable.
For trusts, you only need a new EIN if:
- Only one person makes the trust(s)
- The trust becomes an estate
- A living trust transitions to a testamentary trust
- You distribute property to a residual trust and terminate the living trust
You don’t need to update your EIN if:
- The trustee name changes
- The beneficiary updates their name or address
How to find your federal tax ID online
If you ever misplace your federal tax ID, you can generally find it on one of these business documents:
- Confirmation letter: When you submit your online EIN application, the IRS will immediately send a confirmation letter with your EIN number to your email.
- Old tax returns: If you’ve ever filed a federal income tax return using your FEIN, you should be able to find it listed in the box labeled “Employer Identification Number.”
- Official tax notices: If you filed using your EIN, the IRS will send you a notice with your balance with your Employer ID number listed at the top.
- Business license or permit: When you apply for either of these, the state asks for your EIN. If you kept a copy of the application, you should be able to find it there.
- Bank statements: Most bank statements will show your tax ID number at the top of the document whether they mail it to you or you pull it up online.
If you still can’t find your EIN, call the IRS at (800) 829-4933 and ask them to look it up for you.
Still confused about tax IDs?
Applying for a tax ID may be free and fairly straightforward, but that doesn’t mean you won’t encounter questions while completing the process. If you find that you need help, connect with a RussianLawyers-approved attorney for advice and support.