FEIN vs EIN: Is There a Difference?

FEIN and EIN are often used interchangeably, and for good reason—these two numbers are the same thing. There is no meaningful difference between a Federal Employer Identification Number (FEIN) and an Employer Identification Number (EIN) as both acronyms refer to the same nine-digit tax ID.

Essentially, you can think of a FEIN/EIN almost as a Social Security number for your business. You need this number to conduct even the most basic business functions in the United States, such as remitting payroll and income taxes for employees, applying for company credit cards and payment processing solutions, or taking out business loans. This number will serve as your basic business identifier in interactions with government agencies, financial institutions, and other organizations.

Most businesses operating in the United States will require a FEIN/EIN with a few occasional exceptions. Let’s dive deeper into what factors might determine your eligibility.

What Types of Businesses Require a FEIN?

In applying for a FEIN or EIN, you establish your business as a legal entity with the US government. Whether you’re a partnership, corporation, limited liability company (LLC), nonprofit, or other business entity, you likely will need to apply for a federal employer identification number.

An exception: Some sole proprietorships can get away without a FEIN or EIN. In these instances, the business will use the owner’s Social Security number for tax reporting purposes instead. However, these businesses still can apply for a FEIN/EIN—and probably should consider doing so.

Establishing your business as an independent entity via its tax identification number (TIN) creates a protective legal separation between you and your operation. Regardless of whether your business structure requires an EIN or not, separating your identity from your business operations adds an extra layer of legal security should anything go awry.

Guidelines and Procedures for Obtaining a FEIN/EIN

Most businesses require a FEIN/EIN. As such, it helps to know the quickest way to get your tax ID once you start your business.

While the IRS offers several avenues, the fastest option is to complete the application online. You’ll need to fill out Form SS-4 with the IRS, and prepare a host of other relevant documents including your business’s name, mailing address, principal activities, and the Social Security or taxpayer ID number of the primary responsible parties.

Once you submit your application online, you should receive your FEIN/EIN the same day.

If the online process is not feasible for your business for whatever reason, you do have other options. The IRS also accepts mailed and faxed SS-4 applications. Applicants not based in the US can also be walked through the application process over the phone. All of the above options are free of charge, though the phone number for international applicants is not toll-free.

FEIN vs EIN: Understanding the Significance

In legally certifying your business, you’re likely to run into a host of confusing—but critical—acronyms. Luckily, you have two less to worry about! Whichever acronym you prefer—FEIN or EIN—obtaining a unique tax identifier is one of the first steps to opening merchant accounts and establishing your business.

When the time does come to find an credit card processing solution, a merchant service provider specializing in startup businesses can help begin your payment processing journey!