A Federal Employer Identification Number (FEIN), also known as an Employer Identification Number (EIN), is used to identify a business entity. While not always the case, most companies need an FEIN to conduct business.
Note: obtaining an EIN through the IRS is free. For this reason, there is no need to pay another party for the service.
Apply Online to Get Started
Despite the fact that there are many ways to apply for an EIN, the preferred method is online. The internet application is simple to understand, easy to follow, and above all else, the quickest way to obtain your number.
Once the application is complete and your information is validated, the IRS can issue an EIN on the spot.
You must also have a number if you are involved with any of these types of organizations:
Real estate mortgage investment conduits
FEIN to Run Payroll
If you are a one person company with no responsibility of paying others, you may be able to get away with running your business as a sole proprietor (and no EIN). However, if you need to run payroll at any time, an EIN is required. Without this, you are unable to move forward with the payroll process, thus you have no way of legally paying employees.
There is a lot that goes into starting a business, but obtaining a Federal EIN is one of the first things you should do. You will need this for everything from opening a bank account to paying taxes to running payroll.
If you have any questions regarding how to obtain an EIN, your tax professional or the IRS can provide assistance. However, you may be able to get an EIN on your own, so you're ready to start your new business.