Before you can open a bank account, apply for a business license or file a tax return, you will be required to obtain a Federal Employee Identification Number (FEIN) for your business. Not every small business needs a FEIN, but many do. Those who do include:
- Any business with employees.
- Any business that operates as a corporation or a partnership.
- Any business that pays employment, alcohol, tobacco or firearms tax returns.
If you’re not sure if you need a FEIN, you can consult the Internal Revenue Service’s web site at www.irs.gov/businesses/small. According to Melvin Springer, a North Bellmore, N.Y.-based financial executive and SCORE advisor (Service Corps of Retired Executives), a good rule of thumb is that “if you record them on your personal tax return you are not required to have one, as you can use your social security number. If you intend to report them on a business tax return you will be required to have a FEIN.”
If you are required to have a Federal Employee Identification Number, there are several ways to apply.
- By Phone: (800) 829-4933.
- By fax or mail: You can find form SS-4 [SS-4 download as pdf] and located fax number and mailing addresses for your location on the IRS web site.
- Online at the IRS web site. You can file the SS-4 online or participate in an “interview style” live chat that will ask you questions and issue you a FEIN if you require one.
Regardless of what method you choose, your number will not be active in the IRS system for two weeks.
While not everyone is required to get a FEIN, you may decide that it’s worth applying for one anyway. There is no charge and you never know when you may decide that it’s time to hire an employee or when your business circumstances might change and you will need one. It might be best to have already done the legwork rather than trying to do it on the fly.