Image by Flickr.com, courtesy of Kevin Dooley
In the United States, the government requires businesses to have a Federal Employer Identification Number (FEIN). This 9-digit number, often called a "tax ID number," classifies a company for tax reporting and other business purposes. A FEIN number is also used in a company's dealings with its insurance carrier.
Insurance Carriers
The Office of Insurance Regulation requires a business to report its FEIN number to its insurance carrier.
Insurance Payments
An insurance company needs a company's FEIN number so it can issue the business a 1099 for insurance payments that have been made.
Workers' Compensation
When a business buys workers' compensation insurance, it must present its FEIN number to the workers’ compensation board in its state. The number is used to help obtain and monitor coverage.
Other Uses
FEIN numbers are used to form a trust, hire employees and create a pension plan.
Exception
With a sole proprietorship, the owner's Social Security number can be used for tax reporting and other business purposes.
References
Resources
Writer Bio
Brandi Berry is a wife and mother from Kansas City. She believes she is not only in this world to learn all she can, but to teach all she learns. Berry loves to write and finds the Internet an ideal outlet to provide readers with advice and information through her stories.