The Employer Identification Number (EIN), also known as the Federal Employer Identification Number is a nine-digit number issued by the Internal Revenue Service (IRS).
It is assigned to business entities carrying out commercial activities within the United States. Obtaining an EIN is required for the recognition of the company and filing taxes.
This number is known as Taxpayer Identification Number (TIN) when it is used for the purpose of recognition rather than company tax reporting. Employer Identification Number (EIN) is commonly related to employment tax reporting. A nine-digit tax number is often required in order to open a bank account or transact business.
A business needs an EIN in order to pay employees and to file business tax returns. To be considered a Partnership, LLC, Corporation, S Corporation, Non-profit, etc. a business must obtain an EIN.
Those businesses that do not are considered proprietorships and the Owner / Operator SSN is used on any tax documents. Also, financial institutions such as banks, credit unions, and brokerage houses will not open an account for a corporation without an EIN. Since all corporations – including ones with no income – must file at least a federal income tax return, a corporation operating or incorporated in the United States generally must obtain an EIN anyway either before or after being issued its charter.