Federal Employer Identification Number (FEIN): How to Get One

How can I get a FEIN?

1. Determine your eligibility for a FEIN.

The two indicators that you’re eligible for a FEIN are if your main business is located within the U.S. or its territories and if you have a valid Social Security number or another form of tax identification, such as another FEIN.

Having your main business in the U.S. or its territories means that the majority of your income as a business owner comes from a practice residing in this area. Therefore, even if you have another business outside the U.S., you may still be eligible for a FEIN. The person applying for a FEIN does not need to be the business owner, but they must have firsthand knowledge of and dealings with the company’s finances. A secretary or administrative assistant can also apply for a FEIN. They can sign Form SS-4 and provide their information in the third-party designee section.

2. Collect the necessary information for the IRS.

The IRS requires the information in Form SS-4: Application for Employer Identification Number. First, you’ll need to provide a physical address for your business (with a location in the U.S.) to receive a FEIN.

On the application form, you’ll need to state the legal structure of your business, such as a limited liability company or corporation. If your business is an LLC, you must list the members of the organization. You need to state the type of business you conduct further. [Related article: What is an LLC?]

This is some additional information you’ll need when applying:

• The reason you’re applying for a FEIN. As an example, you may be launching a new business or have restructured your existing business.
• The specific date you began or acquired your business.
• The industry your business is in or that you retain business in, such as retail or consulting, as well as the product or service description.
• When employee wages were first paid through your business.
• The date of the end of your fiscal or accounting year. This is typically the month of December if you pay your taxes through the calendar year.
• The highest estimate of employees you plan to hire in the coming year.

3. Apply for a FEIN online, by phone or through the mail.

If you are required to have a FEIN, there are several ways you can apply for one:

• By phone: (800) 829-4933
• By fax or mail: You can find Form SS-4 here and locate the fax number and mailing addresses for your location on the IRS website.
• On the IRS website: You can file Form 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. This service is available Monday through Friday, 7 a.m. to 10 p.m. Eastern time.

Regardless of the method you choose, it will take two weeks for your number to be active in the IRS system.

Even if your business is not required to have a FEIN, you may decide that it’s worth applying for one anyway. There is no charge to do so, and you never know when you may decide that it’s time to hire an employee or when your business circumstances might change.

What is the purpose of a FEIN?

A FEIN is a way for the IRS and other government entities to identify and track business entities’ tax and financial activities. It’s required to file tax returns as well as to set up retirement accounts, health accounts and to offer employee benefits.

Who needs a FEIN?

Not every small business entity needs a FEIN, but many do:

• Any business with employees
• Any business that operates as a corporation or under a partnership agreement
• Any business that pays employment, alcohol, tobacco or firearms tax returns

If this is confusing to you, you can hire one of the best payroll services to help with processing and reporting payroll-related taxes. [Related article: How to Process Payroll]

Businesses that typically do not need a FEIN include the following:

• Those that operate a sole proprietor
• Those that do not have employees
• Those that are not required to pay certain taxes as indicated above

If you start your business as a sole proprietor and use your Social Security number as opposed to a FEIN, you may discover later that you need one ― mainly, if you plan to expand or restructure your business to a corporation and/or hire employees. If you form a corporation later, you will need a FEIN. A FEIN is a very important part of your business data when you’re filing local, state and federal taxes.

You also need a FEIN when your organization pays taxes of any kind and when you issue employee-related tax forms, such as W-2s. Employers are required to issue W-2s to their employees at the end of each tax year. All payroll reports contain your FEIN, including monthly, quarterly and annual tax forms, all of which can be filed by a professional payroll processing company.

You will also have to issue a 1099 to every independent contractor that you paid at least $600 to during the tax year and your FEIN will also be needed on that form.

Not only will your business need a FEIN for various purposes, but your employees and outside contractors will also need it when they prepare their tax returns.

Tejas Vemparala contributed to this article.