What is it?
A tax ID number (also known as an EIN, FEIN, Federal Tax identification number, or employer identification number) is a special and unique number that is assigned to business entities in order for businesses to hire employees and file business income tax returns. This number is similar to a person’s Social Security number but instead for a business entity. However, it is not as confidential as an SSN, as there is significantly lower risk associated with identity theft.
Should I file for a Tax ID?
Of the below questions, if you answer “Yes” to any, you may need a Tax ID number for your business:
- Do you plan to hire, or have you already begun hiring employees?
- Are you incorporated as an LLC, partnership, or corporation?
- Do you already have or plan to establish abusiness bank account?
- Are you working to build credit for your business?
- Do you file taxes for the following: employment,excise, alcohol, tobacco, or firearms?
- Do you withhold income tax from non-resident employees?
- Is it possible that you may change your business entity type?
Regardless of the type of business entity type you operate, even if you decide not to hire employees, you should obtain an EIN.