FEIN Number: Everything You Need to Know
FEIN numbers are used for identification purposes for businesses in the United States. 5 min read
2. Federal Employer Identification Number (FEIN): How to Get One
3. How to Look Up an EIN Number
4. Select Your Entity Type
5. What is an ENTITY type?
6. Sole Proprietor
7. Limited Liability Company (LLC)
10. Nonprofit/tax exempt organizations
14. Reasons to apply for an EIN
15. When will I receive the official letter from the IRS?
FEIN numbers are used for identification purposes for businesses in the United States. FEIN stands for Federal Employer Identification Numbers (FEIN) and is a nine-digit unique number assigned by the Internal Revenue Service (IRS) to businesses operating in the United States.
An FEIN is also known as EIN – Employer Identification Number. Every business should only have one FEIN. It can be used when filing tax returns as well as for banking and legal matters. Information and application information is available on the IRS website.
Federal Employer Identification Number (FEIN): How to Get One
Every employer is required to obtain a Federal Employer Identification Number (FEIN) before the business can open a bank account, apply for a license, or file a tax return. While not all small businesses need an FEIN, any employer with employees that operates as a corporation or partnership must obtain an FEIN.
If an owner of a business is not sure if it needs an FEIN, he can reach out to the IRS who will provide the answer. Typically, if a business reports on a personal tax return, the business is not required to have an FEIN since it can just use the Social Security number. However, if the company intends to report on a business tax return, it must obtain an FEIN.
If a company is required to have an FEIN, there are multiple ways in which to apply. It can obtain an FEIN by phone, by fax, by mail, or online. To apply by phone, the number is (800) 829-4933. To apply by fax or mail, an applicant will need to fill out the SS-4 form and locate the fax number and mailing address for the IRS location.
To apply online, an applicant can go to the IRS website. Here, he can file the SS-4 form or participate in an “interview style” live chat with a representative that will request information from the owner and will issue an FEIN if it determines the business requires one.
Regardless of which method an applicant chooses, the company’s FEIN number won’t activate for two weeks.
How to Look Up an EIN Number
If a business needs to look up an employer’s FEIN, it can either look the number up online or by looking at an employee’s W2 forms. Additionally, anyone can find the EIN for a publicly traded company on the SEC Filings page. On the first page of any one of the filing documents, the EIN must be listed.
Select Your Entity Type
When applying for an FEIN, a business must select its desired entity and input the required information on the application. Government officials process the application with the IRS with an expected turn-around time of usually the same day, typically even within the hour.
What is an ENTITY type?
The IRS treats different entities differently depending on the set up and tax structure.
Different entities include LLCs (limited Liability Company), Corporation, Partnership, Trusts, Estates of Deceased Individuals, Non-Profit Organizations.
A Sole Proprietor is one individual that owns a company and is not incorporated or registered with the state as a limited liability company (LLC). A sole proprietor can be self-employed individual or an independent contractor.
Sole proprietors may or may not have employees and includes household employers for baby sitters, nannies, housekeepers, maids, drivers, health aides, private nurses, caretakers, yard workers, and similar domestic work
The sole proprietor reports business income on the sole proprietor's individual tax return
Limited Liability Company (LLC)
Limited Liability Company (LLC is a structure allowed by the state statute and is formed by filling articles of organization with the state.
Members/owners may include individuals, corporations, other LLCs and foreign entities. There can be no more than one active LLC with the same name in the same state. For federal tax purposes, an LLC may be treated as a partnership or a corporation, or be disregarded as an entity separate from its owner.
An LLC can also be organized as a professional limited liability company (PLLC) or a limited company (LC)
A trust is a legal entity that is created under state law and is taxed under federal law. It can be created to perform one act or a series of acts. All types of trusts including conservatorships, custodianships, guardianships, irrevocable trusts, revocable trusts, and receiverships. Trusts needs to file an IRS tax ID application. Even if the applicant created trusts before, IRS-EIN-TAX-ID can get the paperwork done correctly and quickly because one incorrect entry can result for the application to be rejected.
An estate, decedent estate or succession is a legal entity created as a result of a person's death. The estate consists of the real estate and/or personal property of the deceased person. The estate pays any debts owed by the decedent and distributes the balance of the estate's assets to the beneficiaries of the estate.
Nonprofit/tax exempt organizations
Non-profit or tax-exempt organizations include corporations, trusts, limited liability companies, and unincorporated associations that qualify for tax exempt status under Internal Revenue Code (IRC) 501 as described in Publication 557. Non-profit organizations include public charities, private foundations, educational organizations, employee associations, veteran's organizations, business leagues, state-chartered credit unions, child care organizations, and teachers' retirement fund association.
An unincorporated organization with two or more members is generally classified as a partnership for federal tax purposes if it carries on a trade, business, financial operation, or venture, and divides its profits. A joint undertaking merely to share expenses is not a partnership. For example, a co-ownership of property maintained and rented or leased unless the co-owners provide services to the tenants would not be classified as a partnership.
Applying for a federal identification number is one of many tasks that partners must take on when starting a business partnership. Partners can be individuals, corporations, trusts, estates and other entities.
A corporation is a legal entity established by a charter granting it certain legal powers, rights, privileges, and liabilities. It can be established by a person or group of people with a charter from the state's secretary of state. After a corporation is created, it becomes its own entity and generally has an indefinite lifespan. Corporations can include S corporations, personal service corporations, real estate investment trusts (REIT), regulated investment conduits (RIC), and settlement funds
When the company starts a corporation, it will need to open a business bank account that requires the company to have an EIN for the business.
An S corporation is an eligible domestic corporation that wants to avoid double taxation by electing the status using Form 2553. The income of an S corporation generally is taxed to the shareholders of the corporation rather than the corporation itself. With the company's IRS EIN, the company can apply for credit for office supplies, a company vehicle, or a small business loan.
The above entities are just some examples of the types of employers that need to obtain an FEIN.
Reasons to apply for an EIN
A company will need to get an EIN/Tax ID Number when starting a new business. All business entities are required to have an EIN to identify the taxpayer. If a business wants to change their ownership structure, it usually must apply for a new EIN. Any at-will hire employees, including household employees, will also need an EIN. If a business wants to open a bank account or start a line of credit, it needs an EIN. Whenever a trust, pension plan, corporation, partnership or LLC is created, an EIN is needed.
When will I receive the official letter from the IRS?
A business can expect an official letter from the IRS usually within four weeks after submitting the application. The official letter will contain the paperwork for the company’s EIN. Some banks will require this physical document, while others just require an EIN for most of the business needs.
If you need help getting an EIN, you can post your legal need on UpCounsel’s marketplace.