There is an unfortunate amount of confusion surrounding the concept of the Federal Tax Identification Number. It is ironic, because the whole Tax ID, FEIN, and EIN thing is actually very simple, mostly because they are generally all the same thing. However, it isn’t surprising that this concept confused many personal finance students because when it comes to things like laws and taxes, tiny variations in terms usually mean very different things.
What is a Tax ID Number?
Tax ID Number, or Tax Identification Number (TID), and the like, all refer to the same thing. When taxes are filed, whether they are personal income taxes, or business income taxes, there must be a unique identifier used on the tax return. Likewise, if income is reported, that income must be reported to the IRS with a unique number identifying who it was paid to.
In the case of Federal Income Taxes, the tax ID number is a Social Security Number. However, businesses do not have SSN, so they need a different unique number to use for identification purposes on tax documents.
FEIN stands for Federal Employer Identification Number. It’s “brother” is the EIN which stands for Employer Identification Number.
What Is The Difference Between an EIN and a FEIN?
Let’s start with the easiest part of the tax number concept to understand. There is no difference between a FEIN and a EIN.
To be more technically correct, there is no such thing as a FEIN. While there may be State-based employer identification numbers, the Federal Government makes no allowance for them in its official terminology or within the tax code. Thus, if someone is talking about Federal and state tax ID numbers, then they are technically discussing Employer Identification Numbers (EIN) and State Employer Identification Numbers. In other words, there is no “Federal” label for official purposes.
The arbiter of all taxable information and tax numbers is the Internal Revenue Service. No one else counts when it comes to Federal Income Taxes. It is not surprising then, that the IRS issues EINs or Federal Tax Identification Numbers.
Do I Need an EIN (Employer Identification Number)?
For many entrepreneurs, their small business is a separate legal entity. Such a business structure limits personal liability for small business owners. Whether it is via a S Corp, Limited Liability Partnership (LLP), or Limited Liability Company (LLC). In some cases, a business tax ID number is required. In others, it can be optional.
The thing that throws most people and generates plenty of questions for those who provide personal financial advice and tips, is the word “employer.” Many entrepreneurs have small businesses which have no employees, or only family members as employees. Thus, the inevitable question is whether or not such a business requires an EIN.
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Despite the name, an EIN is merely an identification number used for tax purposes. While only businesses with employees are required to get an EIN, businesses without employees can use them as well.
In fact, every small business owner should get an EIN tax ID number whether they have any employees or not. This is not only good business practice, it is also very necessary in order to protect privacy and prevent identity theft.
Whenever a business pays more than $600 in a calendar year to a business, whether a small business or otherwise, they are required to report that payment to the IRS. To do so, they must file an IRS form that, not surprisingly, requires the recipient’s tax ID number to be listed. As a small business owner, you have two choices:
- Use Your Own Social Security Number
- Use a Tax ID Number or EIN
It shouldn’t be rocket science why you don’t want to be handing your SSN out all over the place. Obviously, if your business is a small sideline thing and you only do work for people you know and trust, or well-known reliable companies, then the risks are lower. However, the fewer places you can give out your social as you go through life, the better.
How To Apply for FEIN or EIN Tax Number
You can apply for a state tax id number with your state’s Secretary of State office. You can apply for an EIN online directly via the IRS.
Look Up FEIN or EIN Online
Unfortunately, the IRS does not provide a way for you to look up your EIN online at irs.gov. Instead, you can call the IRS to search for your EIN by calling the Business & Specialty Tax Line. The phone number for IRS there is 1-800-829-4933. They are open from 7:00 am to 7:00 pm Monday-Friday. If the thought of calling the IRS gives you hives, you aren’t alone. Fortunately, there are better ways to find your EIN fast.
Obviously, when you get the letter from the IRS with your EIN on it, you should put it in your permanent records. Keeping permanent doesn’t have to mean holding onto a piece of paper. Your business should have some sort of electronic recording keeping. I use a Canon all in one printer (mf634cdw – the new one is mf734cdw – you can get a cheaper one if you don’t need color) that I found super-marked down at Office Depot that is within arms reach of my desk, but as long as you get good quality and tag or file the images so you can find them later, you can use your cell phone camera.
No matter what system you use, make sure it is backed up so that you can produce your IRS records for three years. If you don’t want to figure anything else out, buy a brand-new USB drive and back your tax records up at the end of the year, and then again after you file.
If you can’t find your paper, or you just don’t have time to look at it, it will be faster to call your bank where you have your business checking account set up. They will have wanted your EIN when you signed up for the account, so they’ll have it. You can lookup your EIN online if your bank’s online banking portal provides it there, free, cheap, easy, and fast.
If you can’t find your EIN letter, but you can find last year’s taxes (or any year you filed a Schedule C) your small business EIN is on there as well.
About The Author
By Brian Nelson – Brian is a former Certified Financial Planner and financial advisor. He writes for the Finance Gourmet and other financial publications. The material provided on this website is for informational use only and is not intended for financial or tax advice. ArcticLlama, LLC, FinanceGourmet.com, and Brian Nelson, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own tax professional when making decisions regarding your tax situation.
The simple truth of federal income taxation lies within the Internal Revenue Code and several United States Supreme Court income tax decisions which by the way, have never been overturned. If YOU wish to continue to pay a tax on your income that is not paid to YOU as federal income, then you commit perjury but don’t worry, the Government has never prosecuted one person for telling a lie when filing federal tax return forms, because the money YOU pay as a “tax” is nothing less than a “free gift” to the Government to be wasted away at their discretion.
I’m not sure what you are confused by here. It is perfectly legal to set yourself up as a business entity and pay taxes that way. If you are advocating not paying taxes at all, that argument has no standing, no matter what you read on the internet.
I work at a Portuguese company, and we often buy small ammount parts from companies in the US.
In Europe, the fiscal identification number is mandatory on invoices (both the seller and the buyer’s).
When you send a supplier or a customer your companies identification, the fiscal number is mandatory.
Is it a problem if I ask an LLC (our US suppliers) for their EIN ?
I´m I asking for confidencial/sensitive information?
Thank´s in advance
An EIN is not sensitive information, and should be reasonable to provide.
Great explanation here! You have clearly mentioned the difference between an EIN and FEIN, your blog really contain useful information for every business owner. Thumbs up for the post, keep sharing!
Got it very clearly.TKS
Why is the Florida FEI/EIN number different for the number on their W9?
A Florida EIN is for Florida state tax purposes. Some states just use the Federal EIN, and some states don’t.
Thanks for sharing useful information about EIN and FEIN.
I meant buying, fixing and selling cars, sorry…
Hello, I am starting my business (buying, fixing, and reselling them again), so what do I do now? I got my business permit, so what should I get now? TIN? EIN? Federal tax identification number? State tax ID? state employer ID number?
I am so confused! I am the owner of my business, no employees (unless family counts, dad only has an ITIN number, so is he considered an employee?).
I need some products and the companies where I will get these require a “state ID tax number”? what is this?
I am so confused! Help!
Every state has its own rules, so I can’t really help you there. But, for federal income tax purposes you are going to need an EIN for you business. The good news (sort of) is that you will usually need an IRS issued EIN to get any state identification numbers you might need. If you have a business that has to collect sales tax, that is who different thing, and you’ll need another number for that. Check you Secretary of State webpage for you state. They all have good info, as well as information you can order, or people you can talk to. Remember they need you to be successful so that they can collect taxes from you, so they are more than happy to help.
Thanks helped me a lot
Help! I just submitted a form through IRS to get an EIN and it’s only 8 digits so I’m unable to continue setting up my business. What do I do?
Thank you for your valuable information presented in an easy to use format! Phil S.
This is a wonderful web site! You have taught me more through your no nonsense information than any other means I’ve used. Thank you very much. Phil S.
I started a small lac to do work on the side. I don’t have employees. If I get an EIN would I still be able to do one combined tax filing. Or would I have to file two separate returns? I funded the local with personal $$.
Thanks in advance
If I have a NYS EIN and moved to NC, do I need a new EIN? Do individual states require their own tax IDs?
An EIN from the IRS is good anywhere in the US.
Would you be able to assist. I filed for an EIN number in NY State. Can you please let me know what time frame I should expect before receiving the actual number.
Thank you
Not sure if New York has it’s own numbers for state taxes. If not, you should have gotten your EIN immediately on the website if you are talking about the Federal ones. Then you get a follow up letter in the mail about a week later.
I’m confused, now–I thought there were no Federal EIN’s. Would you clarify?
By the way, I love the article. It was very straightforward and even made me laugh. I’m sharing it on my Facebook page. 🙂
So, EIN is Employer Identification Number. Although some states have them, most people care about the ones that come from the Federal Government, and the IRS in particular. So, yes, there are Federal EINs, but the official name does not include the word “federal”. The official name is just Employer Identification Number, or EIN. Hopefully, that’s clear.
Is it possible for a non-us citizen to get a EIN so as to form a LLC. I have been scouring the IRS site and others but yet can not answer this question.
EINs are tied to businesses, not to their owners, so yes, you should be able to get an EIN. That said, if you are going to earn income in the US, especially if you’ll report your business income on a Schedule C, you’ll need a personal tax identification number as well (assuming you don’t already have one.)
I just joined a gcroup who has an EIN number and are asking for donations, but said they are not tax deductable. Are they or are they not?
EIN numbers are for identifying business entities. They are not necessarily non-profits, which would be tax deductible. While you do need the EIN number to deduct contributions to a non-profit, not all entities with an EIN are non-profits. For most deductions, it will need to be a 403(b) organization, with certain exceptions. If they say they are not deductible, then they almost certainly are not, at least not as charitable deductions.
I just changed my business from a sole proprietor to an LLC. I didn’t think I needed a new EIN, but I was reading earlier that if I plan on hiring employees( and I do…fairly soon), that I need to get a new EIN. Is that true?
You can get an EIN even if you do not have employees.
You must have an EIN if you do have employees. You’ll need that number to do all of their payroll taxes and to get all of your deductions.
Thanks so much for the clearly given information. Easy to understand!
After working with trying to figure this out for almost a whole month now, this is the first site I have come across that actually helped me to make perfect sense of the whole concept. Thank you so much for the needed information and have an awsome day.
Thanks. Glad I could help.