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What Is an Employer Identification Number (EIN)? | Speed Commerce

What Is an Employer Identification Number (EIN)?

3PL Glossary > Employer Identification Number (EIN)

What Is an Employer Identification Number (EIN)?

An Employer Identification Number (EIN) is a unique nine-digit identification number assigned by the Internal Revenue Service (IRS) to businesses and other entities for tax identification purposes. Also known as a Federal Employer Identification Number (FEIN), the EIN is used to identify employers, sole proprietors, corporations, partnerships, trusts, estates, and other entities for various tax-related activities. The EIN serves as a way for the IRS to track and manage the tax obligations of businesses and organizations.

What Are Examples of Institutions That Need an Employer Identification Number (EIN)?

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Businesses typically obtain an EIN when they are formed or when they hire employees. The EIN is essential for various business activities, including filing tax returns, opening business bank accounts, and applying for business licenses. Additionally, it is used by the IRS to monitor and track employment taxes, ensuring compliance with tax regulations. Sole proprietors who do not have employees may also obtain an EIN for business-related activities, even though it is not mandatory for them.

To obtain an EIN, businesses can apply online through the IRS website, submit a paper application, or apply by phone or fax. The EIN is issued to the business entity and remains associated with it throughout its existence, even if there are changes in ownership or structure. Properly managing and using the EIN is vital for businesses to fulfill their tax obligations and maintain legal compliance with the IRS.


No. While sole proprietors without employees may choose to use their Social Security Number for tax purposes, businesses with employees or other entities such as corporations and partnerships are required to obtain an EIN. The EIN is specifically designed for business-related tax identification and reporting.

No. An EIN is unique to each business entity and is not transferable. If there are changes in ownership or structure, such as in the case of selling a business, the new owner must obtain a new EIN for the business. This ensures that the IRS can accurately track and associate tax obligations with the correct entity.

Yes. Businesses and entities can apply for an EIN online through the official IRS website. The online application process is user-friendly and provides immediate confirmation of the assigned EIN upon successful submission. Other application methods include applying by mail, fax, or phone.

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