Are you looking into starting a new business? Thousands of businesses are started each year in the United States alone. In order to properly start a business, you’ll likely have to obtain an Employer Identification Number, EIN for short (also referred to as a Tax Identification Number or Federal Employer Identification Number, FEIN). An EIN identifies a business for federal tax purposes. Think of an EIN as the Social Security Number of a business.
The Internal Revenue Service (IRS) requires most new business to obtain an EIN in order to identify the tax accounts of your business and pay federal employee withholding taxes. If you fail to obtain an EIN, you can face some steep penalties by the IRS.
In this article, we’ll go over what an EIN is, how to obtain an EIN, and some additional considerations.
Next, we’ll go over what an EIN is, and define it in terms that we can all understand.