The Federal Tax Identification Number, also known as an Employer Identification Number, "FEIN," or "TIN," is a company social security number. It is the number the IRS uses to identify the company and must be included in the business's tax filings. Businesses can apply for an EIN by preparing IRS Form SS-4 and filing it with the IRS. Certain states also require a state tax identification number. To know if your state requires a different number, we recommend contacting your state's taxation authority.

Suppose you operate your business as a sole proprietorship or partnership and are now looking to incorporate or form a limited liability company (LLC). In that case, you must acquire a new EIN for your business.

Businesses need an EIN to settle their federal taxes online, file annual tax returns, and issue payroll and tax documents to suppliers. The number has less to do with employees and more with taxation, so if your business pays taxes, you need an EIN. A company must be located in the U.S. to receive an EIN. In addition, the person applying for the EIN must have their taxpayer identification number, such as a social security number.

A wide variety of entities may apply for an EIN, from sole proprietorships to partnerships, LLCs, corporations, government agencies, non-profits, and other associations. There are no size requirements or constraints as far as employees are concerned. For example, a sole proprietorship with only the owner as an employee can request one, as can a multinational corporation or charity.

EINs are unique to the enterprises to which they are assigned. The numbers never expire, and the same number set is never reallocated to another company, even if the original employer goes out of business. The main benefit of getting one is the ability to operate. Your business can't function without it. You must apply for an employer identification number before starting. You also need an EIN to do the following:

• Hiring and paying employees
• Opening bank accounts, obtaining credit, and investing surplus cash
• Maintaining corporate shields
• Filing business taxes and registering state taxes

Getting an EIN permits you to keep your personal and business finance separate. This enables you to shield your personal information and protect it from identity theft.

Self-employed individuals such as subcontractors are generally required to have an EIN, which the primary contractor will use to report to the IRS all business income paid to the subcontractor.