If you are planning to start a business and if you are new to some of the terms used when it comes to paying taxes to the Federal Government, then one of the things that you will need to know is the terms used, such as the Employer Identification Number (EIN), Federal Employer Identification Number (FEIN), or the Taxpayer Identification Number (TIN). These terms actually refer to the same nine-digit numbers issued by the Internal Revenue Service (IRS) and are used for tax tracking purposes.
When the tax id number is used by a business for identification purposes, the number is referred to as a Taxpayer Identification Number (TIN), and when it is used for reporting employment taxes, it is referred to as an Employer id number (EIN).
You will be required to apply for an Employer Identification Number (EIN) or the Federal Employer Identification Number (FEIN) if you are starting a small business, whether you intend to take in any employees or not. It can be done by filling up an application form via the IRS’ website which is one of the fastest ways to obtain your tax id number. If you are an owner of a large estate, and if you are planning for a trust to manage your estate or assets, you too will have to obtain an trust tax id number with the Inland Revenue Service or IRS.
Before you fill the application for the tax id number, you will have to know your business entity type. Start by selecting your business entity type, e.g. sole proprietor, partnership, or LLC, etc. Application for the tax id number via the IRS online site is free of charge. Once you have secure the tax id number, you can apply for a bank account for your business’ transaction without waiting for the official letter from IRS to reach you which might take about a month. You can also use the tax id number to apply for your business’ licenses and file your company’s yearly tax return.
Once you have obtained your tax id number, it will not expire. You will only need to apply for a new number if you are changing your business entity structure.