Federal Tax ID Number

An Employer Identification Number (or EIN for short) is also referred to as a Federal ID number, Tax ID Number, or Federal Tax ID Number. It is a nine-digit number used for tax filing and reporting and for other business documentation purposes. Rather than using your Social Security Number, your EIN can be used to obtain business licenses and permits, apply for business credit cards, aor set up business bank accounts.

An EIN helps establish a separation between your business and your personal self—which can help provide some liability protection for your personal assets. It also offers some privacy protection. If you work as a contractor, sharing your EIN rather than your SSN with everyone you do business with minimizes the risk of identity theft. The fewer people that see your SSN, the less open your identity is to being stolen.

Getting a Federal Tax ID number is optional if you’re a sole proprietor, but if your business acts as a C Corporation, Limited Liability Company, or a partnership, you are required by law to have one.