EIN (Employer Identification Number)
Definition
An EIN (Employer Identification Number) is a unique 9-digit tax ID assigned to your business by the Internal Revenue Service (IRS). Also known as a Federal Tax Identification Number (FEIN), you can think of it as a Social Security Number for your LLC.
Why it matters
You cannot effectively run a business without an EIN. You need an EIN to open a business bank account, hire employees, apply for business credit cards, and file federal taxes. Getting an EIN is 100% free directly through the IRS website. You should never pay a third-party service to obtain an EIN if you already have a US Social Security Number.
An EIN does not automatically mean your business is taxed as an S corporation. See how to check S corp status.
Example
After receiving her approved Articles of Organization from the state, Maria goes to the IRS website and fills out the online EIN application. She enters her LLC's legal name and her own SSN. The IRS immediately generates an official PDF confirmation (CP 575) containing her new 9-digit EIN. She takes this PDF to Chase Bank the next morning to open her business checking account.