For any business operating in the United States, having proper identification is crucial. Among the essential identifiers are the Federal Employer Identification Number (FEIN) and state employer identification numbers. While the FEIN is obtained from the federal government, the state EIN is specific to departments of a state. For example, you may have an unemployment account number from the Department of Employment Security and a withholding account number from the Department of Revenue. In this support article, we will explore the reasons why your business needs both a federal and state EIN and provide resource links where you can find the applications for an EIN.
Why You Need a Federal Employer Identification Number (FEIN):
Tax Reporting and Compliance: The FEIN serves as your business's tax identification number and is used for various federal tax purposes, including reporting income, employment taxes, and other business-related tax obligations.
Hiring Employees: If your business plans to hire employees, having an FEIN is a requirement. It allows you to withhold payroll taxes, such as Social Security and Medicare, and report these taxes to the Internal Revenue Service (IRS).
Opening Business Bank Accounts: Most financial institutions require an FEIN to open a business bank account. Separating personal and business finances is crucial for accurate record-keeping and simplifies tax preparation.
Why You Need State Employer Identification Numbers (State EINs):
State Tax Obligations: State governments require businesses to report and pay various taxes, such as sales tax, income tax, and unemployment tax. They also need to withhold and pay employee taxes. A state EIN is essential for fulfilling these obligations and staying in compliance with state tax laws.
State-Specific Reporting: Depending on your business activities, you may need to file specific reports with state agencies. These reports may include information on employee wages, unemployment insurance, and worker's compensation. A state EIN is often necessary to complete these reports. When Workforce.com files and pays taxes on your behalf, your state requires these processes include your EIN.
Unemployment Insurance: State unemployment insurance programs provide benefits to eligible employees who lose their jobs. To participate in these programs, businesses are required to contribute to the state unemployment insurance fund. Obtaining an unemployment account number enables you to fulfill this obligation.
Resource Links to Find the Application for EIN:
Internal Revenue Service (IRS) FEIN Application: The official IRS website provides an online application for obtaining an FEIN. Visit the IRS website at Apply for an Employer Identification Number (EIN) Online | Internal Revenue Service
State Government Websites: Each state department has its own process and application for obtaining a state EIN. Visit your state's official website and search for "employer identification number" or "business registration" to find the relevant resources and application forms.
Find your state's website here.