š¹ Definition
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) in the United States to identify a business entity for tax and reporting purposes. Also known as a Federal Tax Identification Number, the EIN is required for companies that have employees, operate as corporations or partnerships, or meet certain other criteria under U.S. tax law.
The EIN functions similarly to a personal Social Security Number (SSN), but for business entities. It is essential for tax filings, payroll processing, bank account opening, and corporate identity verification.
š¹ Frequently Asked Questions (FAQs)
Q1: Who needs an EIN?
An EIN is required for:
- U.S.-registered businesses with employees
- Partnerships and corporations
- Nonprofit organizations and trusts
- Foreign entities operating in the U.S. or with U.S. tax obligations
- Any business required to file excise, employment, or alcohol/firearms/tobacco tax returns
Q2: How is the EIN used in compliance and verification?
- Verifying the legal existence of a U.S. business entity
- Required in KYB (Know Your Business) and tax due diligence processes
- Used in FATCA and other cross-border information exchange frameworks
- Helpful for screening against the IRSās exempt organization database and public entity registries
Q3: Is an EIN public information?
Yes. While not searchable via a central public portal, EINs may appear in public filings, business licenses, nonprofit records, and IRS exempt organization databases. They are often used by compliance teams to validate U.S. entities.
Q4: How can a company obtain an EIN?
Entities can apply for an EIN through:
- The IRS website (online form SS-4 for domestic applicants)
- Fax or mail (for foreign entities or those without SSNs/ITINs)
Processing is typically immediate online, or takes several weeks via paper-based channels.
