A "Federal Tax Identification Number" is essentially a social security number for business entities. A federal tax identification number is often referred to as an "Employer Identification Number (EIN)" or a "Federal Employer Identification Number (FEIN)" or a "Tax Identification Number (TIN)" in some instances. Although sole proprietorships and most partnerships can use a "Social Security Number (SSN)" for business tax reporting purposes, the majority of corporate entity types such as a corporation or limited liability company (LLC) are required to obtain a unique federal tax identification number.
In order to obtain a federal tax identification number, an application must be completed and submitted to the Internal Revenue Services (IRS). As part of the criteria to obtain a federal tax identification number, the applicant must already have a social security number. Federal tax identification numbers are used for a variety of reasons including the reporting of corporate taxes, business identification, opening of company bank accounts, as well as the tracking of employee payroll.
In addition to a federal tax identification registration, some states will also require that you apply for a unique State Tax Identification Number when transacting business within those states.
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