Federal Employer Identification Number (FEIN): Required For New Business

A Federal Employer Identification Number (FEIN) is sometimes mandatory and easy to obtain while starting a new business and side business. One of the principal activities when beginning your business is applied for a FEIN. So it is important to know what FEIN is and do you have one?

 

FEIN
 

FEIN is sometimes optional for some organizations and mandatory for others. FEIN is compulsory for small entrepreneurs and self-employed entities. So let’s understand who needs to apply and the advantages of having a Federal Employer Identification Number.

 

What is FEIN (Federal Employer Identification Number)?

 

FEIN is an elite nine-digit number allocated to your business and also know as business tax ID or EIN (Employer Identification Number). This is issued by IRS for tax purposes. 

 

IRS(Internal Revenue Service) assigns FEIN to your business for a permanent Tax ID number and distinguishes your business for charge purposes.

 

It is also one type of TIN that most businesses use. There are many types of taxpayers ID numbers like (SSNs) and (ITINs). But FEIN is a unique nine-digit number which means that the business works in the United States.

 

Why FEIN exactly is used for?

 

You must have identified your business while filing your documents like a Business tax return, Form 941, Form W-2. If you want to easily access it and record it on a tax form then you have to keep your Business id at a safe place.

 

Who Actually Required Having a FEIN?

 

Now you are aware of FEIN and let’s discuss who actually required having a FEIN. If you are an employer or have a shared business then you must have a federal identification number.

 

. If you are a business or corporation

. If you have a Keogh or solo 401(K) Plan

. Retain taxes on income

. You're acquiring or considering purchasing a sole ownership

 

People who are running a small business out of their home, freelancers, individual contractors, and people with side jobs who exploit the gig economy are by and large not needed to get an EIN.

Visit the IRS’s website to determine that if you need a FEIN.

 

Apply process for FEIN

 

This is a very easy process and you will get it free of cost. There are no fees for applying for FEIN.

 

FEIN requirement

 

If you have already a Federal Employer Identification Number but lost it somewhere then also you don’t have a need to be worried too much. You can easily search it by computer-generated notice or having a document containing that number.

 

The application process for FEIN

 

. By Online

. By Fax

. By Mail

 

With a Taxpayer ID number, you can apply for EIN online. For online applying, it is necessary that you complete your process in one session. One session is remaining valid for 15 minutes after that it will expire. So it is necessary that you keep ready required document before starting it.

 

After completing all the necessary steps the IRS will provide you Federal Identification Number. You can now download, save or print it for further use.

 

For Fax, you have to fill form IRS Form SS-4 for getting your EIN. If you will provide a return Fax number then IRS will send you EIN within four business days. In case you are not able to provide a return fax number then it will take four weeks to provide your EIN.

 

If you don’t want to apply online and by fax then you can send your application by mail. It can take four weeks to get a FEIN. So if you require it soon then this method is not perfect for you.

 

Once the EIN is created it will never be used for other businesses by IRS. You can close your business with IRS but can’t cancel your Fein. Closing your business doesn’t remove your FEIN from the IRS database system.