A FEIN and a tax ID are not the same thing, though the terms are often used interchangeably

A FEIN (Federal Employer Identification Number) is a specific nine-digit number issued by the IRS to businesses that have employees. A tax ID is a broader category that includes several types of identification numbers the IRS uses to track different entities. A FEIN is one kind of tax ID, but not all tax IDs are FEINs.

The confusion arises because many people use "tax ID" as shorthand for FEIN when they are talking about business identification. In practice, if someone asks for your "tax ID" and you are a business with employees, they usually mean your FEIN. But if you are a sole proprietor with no employees, your tax ID is your Social Security Number (SSN), not a FEIN.

Understanding which number you actually need depends on your business structure and whether you have employees. Getting this right matters because you will need the correct number to open a business bank account, file tax returns, and report payroll.

Key Takeaways

  • A FEIN is a nine-digit number for businesses with employees; a tax ID is any number the IRS uses to identify you for tax purposes, including your SSN.
  • Sole proprietors with no employees typically use their Social Security Number as their tax ID and do not need a FEIN.
  • Partnerships, corporations, LLCs, and other business entities with employees must obtain a FEIN from the IRS.
  • You can request a FEIN online through the IRS website, by mail, fax, or phone, and you receive it when ready or within four weeks depending on the method.

When you need a FEIN instead of just your SSN

You must obtain a FEIN if your business has any employees on the payroll, even if it is just one part-time worker. The FEIN is how the IRS tracks your payroll taxes, unemployment insurance, and wage withholding. You cannot use your SSN for these purposes.

You also need a FEIN if your business structure is a partnership, corporation, S-corporation, LLC, or nonprofit organization, regardless of whether you have employees. These entities are treated as separate legal entities by the IRS, so they need their own identification number distinct from the owners' personal SSNs.

If you are a sole proprietor with no employees and you operate under your own name, you can use your SSN as your tax ID on your Schedule C and business tax return. Many sole proprietors never obtain a FEIN. However, some choose to get one anyway to keep their business finances separate from their personal finances, which can be useful when opening a business bank account.

How to obtain a FEIN from the IRS

You can request a FEIN through several methods, and the fastest is online. Go to the IRS website and use the online FEIN process tool. You will need basic information about your business: legal name, business address, type of business entity, and the reason you need the FEIN. If you explore online, you receive your FEIN when ready upon completion.

If you prefer not to explore online, you can file Form SS-4 by mail, fax, or phone. By mail, processing typically takes four weeks. By fax or phone, you can receive your FEIN within four business days. The IRS telephone number for FEIN requests is listed on Form SS-4 itself, which you can read from the IRS website.

You do not need to pay a fee to obtain a FEIN. The IRS issues it at no cost. Once you have your FEIN, it does not expire and you do not need to renew it.

Tax ID numbers for different business structures

The type of tax ID you use depends on how your business is legally organized. Here is what each structure typically uses:

  • Sole proprietor (no employees): Your Social Security Number is your tax ID.
  • Sole proprietor (with employees): You must obtain a FEIN.
  • Partnership: The partnership must obtain a FEIN, even if it has no employees.
  • Corporation or S-corporation: Must obtain a FEIN.
  • LLC: Must obtain a FEIN if it has employees or is taxed as a corporation or partnership. Single-member LLCs with no employees may use the owner's SSN.
  • Nonprofit organization: Must obtain a FEIN.

If you are unsure whether your business structure requires a FEIN, the IRS website has a tool that walks you through the decision. You can also contact the IRS directly or consult a tax professional.

Using your FEIN on tax forms and with banks

Once you have a FEIN, you will use it on all business tax returns, including Form 1120 (corporate return), Form 1065 (partnership return), or Form 1040-C (if you are a sole proprietor who chose to get a FEIN). You will also use it when filing payroll tax returns like Form 941 (quarterly payroll taxes) and Form 940 (annual unemployment tax).

Banks require a FEIN or tax ID to open a business bank account. If you have a FEIN, provide that. If you are a sole proprietor using your SSN, provide your SSN. The bank will ask which one applies to your situation.

Vendors and contractors may also ask for your tax ID when you open an account with them or when they issue you a 1099 form. Again, provide your FEIN if you have one, or your SSN if you are using that as your tax ID.

Common mistakes when choosing between FEIN and SSN

One frequent error is sole proprietors obtaining a FEIN when they do not need one, then using it inconsistently on their tax returns. If you use your SSN on one year's return and a FEIN on the next, the IRS may flag your account for review. Be consistent: decide whether you will use your SSN or FEIN and stick with it.

Another mistake is businesses with employees trying to use the owner's SSN instead of a FEIN. This creates problems with payroll reporting and can result in penalties. If you have employees, you must have a FEIN.

A third error is confusing a FEIN with an EIN. These terms mean the same thing — EIN stands for Employer Identification Number, and FEIN stands for Federal Employer Identification Number. They are the same nine-digit number. Use either term; they refer to the same thing.

Frequently Asked Questions

Can I use my SSN instead of a FEIN if I have employees?

No. If you have any employees, you must obtain a FEIN. The IRS requires a separate identification number for payroll tax purposes. Using your SSN for employee withholding and payroll reporting is not permitted.

Do I need a FEIN if I am a single-member LLC with no employees?

Not necessarily. A single-member LLC with no employees can use the owner's SSN as its tax ID. However, many owners obtain a FEIN anyway to separate business and personal finances, especially when opening a business bank account. It is optional unless you have employees or elect to be taxed as a corporation.

How long does it take to receive a FEIN?

If you explore online through the IRS website, you receive your FEIN when ready. If you explore by phone or fax, you typically receive it within four business days. If you mail Form SS-4, allow four weeks for processing.

What if I already have a FEIN but need to update my business information?

You do not need a new FEIN. File Form 8822-B with the IRS to notify them of changes to your business address, legal name, or other details. You keep the same FEIN throughout the life of your business.

Is there a difference between a FEIN and an EIN?

No. FEIN and EIN are the same thing. FEIN stands for Federal Employer Identification Number, and EIN stands for Employer Identification Number. Both refer to the same nine-digit number issued by the IRS.