What Is an FEID Number?
Just as an individual has a Social Security number to distinguish himself officially from others with a similar name, a business needs a Federal Employer Identification Number, also known as an EIN or FEID. The Internal Revenue Service assigns this nine-digit figure to track a business's tax-related activities. Also known as Employer Identification Numbers, tax ID numbers and "95 numbers," FEIDs have a distinctive format: XX-XXXXXXX.
C and S corporations, limited and general partnerships, multiple-member limited liability companies and LLCs taxed as corporations must have an FEID. Sole proprietorships and one-member LLCs with no employees or Keogh retirement plan do not need an FEID; these business owners can use their Social Security number on their income tax forms. However, sole proprietorships or LLCs that file federal alcohol, tobacco and firearms or excise returns need an FEID. When a sole proprietorship reorganizes as an LLC, or when a single-member LLC hires staff, the IRS may assign two FEIDs: one for the owner to report income paid by the LLC and one for the business to report related employment taxes.
The IRS offers four free ways to apply for an FEID: online, mail, fax or phone. To use the online application, the IRS' preferred method, applicants need a taxpayer identification number such as a Social Security number, and the business must be U.S.-based or located in a territory of the U.S. Form SS-4 paper applications may take five weeks to process. Faxed applications also use form SS-4 but require just four days to process when the IRS can reply via fax. Applicants who call the IRS' toll-free business and specialty tax line – 800-829-4933 – can get their FEID right away. This phone service operates weekdays only, between 7 a.m. and 7 p.m.
The IRS suggests you consider application processing time to guarantee you have your FEID in time to meet deposit and return-filing deadlines. To make a timely deposit before receiving your number, include the following information on the check or money order mailed to your state IRS service center: business name as provided on the FEID application, address, type of tax, time period the deposit covers and FEID application date. Tax returns filed without a federal employer identification number should include the words "applied for" where the FEID goes. Individuals with a pending FEID should never substitute their Social Security number.
Having an FEID gives individual-run businesses flexibility to hire help when needed without waiting to contact the IRS. It also allows these business owners to keep their personal and business finances separate. Without a business bank account, self-employed individuals may encounter deposit problems with checks made out to the business's name. Without an FEID, they may be denied an account with a wholesaler. Another consideration concerns identity theft: The My Own Business website states that providing an FEID is safer than providing your Social Security number.