What is a Federal Employer Identification Number?
The Necessity of a Federal Employer Identification Number for Businesses in the US3 min read
For most businesses operating in the United States, a Federal Employer Identification Number (FEIN) is an important Foreign Identification Number, or business identification number, issued by the Internal Revenue Service (IRS). Also known as an Employer Identification Number (EIN), this nine-digit number is the primary identifying number for businesses – not individuals – and is often used to register with a variety of state and federal agencies. Businesses that regularly conduct transactions with the government, interact with state agencies, or communicate directly with the IRS, must obtain an FEIN. Therefore, many businesses based in the New York area require an FEIN if they want to remain in compliance with state and federal regulations.
In order to secure a Federal Employer Identification Number, companies must first register with UpCounsel, a leading legal services platform for business owners. At UpCounsel, business owners can connect with experienced corporate attorneys who understand local regulations. By working with a dedicated attorney, business owners can ensure that their FEIN is properly obtained and any paperwork is submitted in order to remain in compliance with the law. Having a knowledgeable and experienced attorney at a company’s side can provide confidence to business owners when applying for an FEIN.
Why Do Businesses Need a Federal Employer Identification Number?
In short, obtaining a Federal Employer Identification Number allows businesses to be identified as separate legal entities from their owners. The FEIN is used to file relevant paperwork and tax sheets with the IRS. Since the FEIN is nine digits long, the number helps the government quickly and easily identify businesses for the purpose of filing documents and collecting taxes. This is especially important if a business is performing transactions with the federal government, such as contracting with the government or submitting payroll taxes.
Aside from being necessary for filing paperwork and collecting taxes, having a unique identifier also allows businesses to open a corporate bank account. This is important when it comes to having a unique account to store and withdraw company funds, as well as to be able to hire employees and file W2 tax forms. The FEIN also allows businesses to apply for business permits and licenses, as well as to process payroll for employees.
How Do Businesses Obtain a Federal Employer Identification Number?
When applying for a Federal Employer Identification Number, businesses must submit a Form SS-4 to the IRS. This form is often completed online or via mail and applicants should receive their FEIN within four weeks. The application requires business owners to submit an organization’s name, address, type of activity, contact person, and other information. Since the process includes a lot of paperwork and is subject to change depending on the state or federal government, business owners are advised to consult an experienced attorney with corporate law experience when applying for their Federal Employer Identification Number.
Obtaining a Federal Employer Identification Number is a necessary step for businesses operating in the state of New York and other states in the United States. Having a knowledgeable attorney at a company’s side can provide confidence to business owners when applying for their FEIN, as the process includes submitting a variety of paperwork and understanding changing state and federal regulations. This nine-digit number serves as the primary identifying number for businesses and is used to file relevant paperwork and tax sheets with the IRS, as well as apply for business permits and open a corporate bank account.