Knowing the ins and outs of federal and state regulations can be difficult, especially if you’re trying to navigate the system from the Windy City. Don’t let that intimidate you from taking the steps to ensure financial security and success. If you’re a business owner in Chicago, it’s important to understand the process behind applying for and receiving a federal employer identification number (FEIN).

What Is a FEIN?

A federal employer identification number (FEIN), also known as an employer identification number (EIN), is a piece of identifying information issued by the Internal Revenue Service (IRS) to employers or sole proprietors for tax filing and reporting purposes. The nine-digit number is a type of assigning system used for IRS tax forms, such as Form 941, Form 1099, and Form W-2.

Why Is a FEIN Important?

Any business or organization established in the United States must have a FEIN issued by the IRS. A FEIN is necessary for the primary purpose of filing taxes; however, it can also be used to open business bank accounts and create financial accounts and tax filings for various business activities. Having a FEIN is important as it serves as your business' personal identification number, to differentiate your business from others.

Different Types of FEIN

There are two main types of FEIN: the common FEIN for businesses and the individual FEIN for self-employed individuals without an employer. An individual FEIN is used by those who receive income from activities such as consulting, freelancing, or rental activities.

Establishing a FEIN in Chicago

The process of obtaining a FEIN is relatively straightforward and can be done online via the IRS website, typically within an hour. You will need to complete IRS Form SS-4, Employer Identification Number, and provide all the necessary information. Depending on the structure of your business, you may need to provide additional documents such as the Articles of Incorporation or a Partnership Agreement.

Once the application is approved, the IRS will send you the FEIN in the form of a letter, which typically arrives within four weeks after the application is submitted. It's important to note that businesses must also register with the Illinois Department of Revenue within 20 days of forming.

For Additional Assistance

The federal tax code and regulations can be complex and intimidating to handle alone. If you’re in need of assistance throughout the process, or guidance in managing the regulatory compliance of your business, the attorneys of UpCounsel are here to help. With attorneys from all around the United States, we have experienced business lawyers who understand the local regulations and can provide tailored advice and counsel to ensure your success.

Topics:

Federal EIN,

Employer Identification Number,

IRS