The Federal Employer Identification Number (FEIN) is a unique identifier issued by the IRS to businesses so they can be identified and distinguished from one another. It is a set of digits used to track a business’s tax accounting as an individual entity rather than a personal one; therefore, it is not your company’s social security number. If you own or run a company, you need an FEIN for many different purposes: An FEIN isn’t something that you can simply request from your accountant or other professional services provider once you start operating under your business name. In order to acquire an FEIN, you must first be aware of the various processes that require it in order to proceed. The rest of this article covers the details on how to obtain an FEIN as well as information regarding which entities are required to have one in order to operate legally under U.S. law.
How to Get an FEIN
The first step to getting your FEIN is to determine the type of entity your company is. This will impact the process of obtaining an FEIN and the forms you need to file. For example, if you are creating a corporation or an LLC, the process of obtaining an FEIN is very different than if you are registering your business as a sole proprietorship. If you are starting a business as a sole proprietorship, you will need to register with your state’s revenue or tax authority first. Once you have registered, you will receive a business identification number (BIN) that is similar to an FEIN. At this point, you can apply for your FEIN by submitting a Form SS-4 and the BIN you received at the state level.
Which Types of Businesses Need a FEIN?
- Corporations – These are businesses that are incorporated through state government and are therefore subject to federal income tax as well. A corporation must have an FEIN to function.
- S corporations – These are corporations that have elected to be taxed as partnerships for tax purposes and therefore require an FEIN as well.
- Partnerships – These are business entities that are registered with the state, but not the federal government. Having a FEIN is optional for partnerships, but they are required to have a federal Employer Identification Number (EIN) instead. The IRS has made it easier in recent years to obtain an EIN online.
- Limited liability companies (LLCs) – These are often referred to as S corporations in that they have elected to be taxed as partnerships for tax purposes and therefore require an FEIN as well.
Getting Your FEIN as a Sole Proprietorship
To obtain an FEIN as a sole proprietorship, you will first complete a Form SS-5 and submit it to your state’s revenue department. Once your business is registered with your state, you can apply for your FEIN by submitting a Form SS-4 and your BIN to the IRS. Your business account will be created within 24 hours of the application being received.
Getting Your FEIN as a Partnership or LLC
To obtain an FEIN as a partnership or LLC, you will complete a Form SS-8 and submit it to the IRS. Once your partnership or LLC is registered with the government, you can apply for an EIN. Your business account will be created within 24 hours of the application being received.
Conclusion
The Federal Employer Identification Number (FEIN) is a unique identifier issued by the IRS to businesses so they can be identified and distinguished from one another. It is a set of digits used to track a business’s tax accounting as an individual entity rather than a personal one; therefore, it is not your company’s social security number. If you own or run a company, you need an FEIN for many different purposes. The first step to getting your FEIN is to determine the type of entity your company is.