If you’re starting a business, you may be confused about the differences between a federal employer identification number (FEIN) and an employer identification number (EIN). Essentially, there is no difference of a FEIN vs. EIN. The terms are used interchangeably to describe the nine-digit number used by the Internal Revenue Service (IRS) for tax purposes. Read below to learn more about whether you need an EIN and how you can apply for a tax ID online.
What Is a FEIN Number?
You need an EIN or FEIN number so the IRS can identify your business and track its taxes. You may also need to obtain a tax ID number to establish a bank account or credit card for your company. All corporations, partnerships, and businesses with employees must obtain an EIN to operate legally.
Do I Need One As a Sole Proprietor or Single-Member LLC?
If your business is an LLC with one member or a sole proprietorship without employees, you do not need an EIN for tax purposes. However, you may need one for banking or credit purposes. Otherwise, you can use your Social Security number for business and taxation purposes. However, if you hire employees as a sole proprietor or your LLC gets another member, you must apply for an EIN or complete an LLC online filing.