Federal Employer Identification Number (FEIN) | Paper Trails

If you’ve just started a business or are preparing to hire your first employee, chances are you’ve heard about something called an FEIN. It might sound like just another government acronym, but it’s actually one of the first and most important steps in setting your business up for success.

If you’ve found yourself wondering, “What is an FEIN?” or “Do I need one just to run payroll?”—you’re not alone. For many business owners, the process of applying for a federal identification number feels like one more confusing task in an already overwhelming to-do list.

In this article, we’ll walk you through what an FEIN is, who needs one, how to apply for an FEIN, and what to do if your business changes down the road.

Let’s get started.

What is a Federal Employer Identification Number (FEIN)?

A Federal Employer Identification Number (FEIN) is a unique nine-digit number assigned by the IRS to identify your business for tax purposes. It works a lot like a Social Security Number, but for your company instead of yourself. You might also hear it called an EIN or federal identification number—they all refer to the same thing.

The IRS uses your FEIN to track business income taxes, employment taxes, and other financial activity related to your business. You’ll also use it when submitting payroll reports, opening a business bank account, or applying for licenses or loans. Once issued, your FEIN is permanent—it won’t expire or change unless your business goes through certain structural changes.

So, you might be thinking, “FEIN vs Tax ID—what’s the difference?” Just know this: a FEIN is a type of tax ID, specifically for business entities.

Who needs an FEIN?

Not every business needs an FEIN, but most do. You’ll need to apply for a FEIN if your business:

• Has employees (or plans to hire any)
• Operates as a corporation, partnership, or multi-member LLC
• Pays excise taxes or taxes on alcohol, tobacco, or firearms
• Offers a Keogh plan (a type of retirement plan)
• Withholds taxes for non-wage income paid to non-resident aliens
• Is a trust, estate, nonprofit, farmers’ cooperative, or similar entity

Even sole proprietors and single-member LLCs can benefit from having an FEIN. It makes separating personal and business finances easier, and many banks and lenders will ask for it when opening business accounts or applying for financing.

Is an FEIN required for payroll?

Yes. If your business is paying wages to employees, you’ll need an FEIN to report and pay payroll taxes to the IRS. You’ll also need it to issue W-2s, file quarterly returns like Form 941, and report unemployment taxes using Form 940.

In addition to your FEIN, most states—including Maine—require a separate state employer ID or account number to run payroll legally. If you're setting up payroll for the first time, this is one of the first steps you'll take.

How to apply for a FEIN

Luckily, the process to apply for a FEIN is fairly quick—and free.

Online

The fastest and easiest way is to apply online through the IRS website. You'll need:

• The legal name of your business
• Your business structure and state of registration
• The responsible party's SSN or ITIN (usually the business owner)
• Your business address
• Your reason for applying (e.g., “hiring employees” or “opening a bank account”)

Once submitted, the IRS issues your FEIN immediately. Just make sure to complete the form in one sitting—the session times out after 15 minutes.

By fax or mail

You can also apply using Form SS-4 by fax or mail.

• Fax: Processing takes about 4 business days.
• Mail: Processing takes about 4 weeks.

By phone

If your business is based outside the U.S., you can apply by calling the IRS at 267-941-1099.

When do employers need to change their FEIN?

You typically don’t need a new FEIN just because your business moves or changes names. But you will need a new one if:

• Your ownership structure changes (e.g., sole proprietorship becomes a corporation)
• You bring on new partners
• Your business is involved in a merger that forms a new entity
• You go through a bankruptcy that reorganizes the business

If you’re unsure whether a change requires a new FEIN, it’s always a good idea to check with your accountant or tax advisor.

FAQs for FEIN

What is the difference between an FEIN and a Tax ID?

An FEIN is a specific type of Tax ID used by businesses. While individuals use Social Security Numbers (SSNs) or Individual Taxpayer Identification Numbers (ITINs), businesses use FEINs to report taxes and identify their entity to the IRS.

How do I find my FEIN?

You can locate your FEIN on previously filed tax forms like a 941 or W-2, the original IRS letter (CP-575), your bank account paperwork, or by contacting the IRS Business Line.

Can I cancel my FEIN?

Technically, no. Once the IRS issues an FEIN, it doesn’t get canceled. But if you close your business, you can notify the IRS and request that your account be closed. You’ll still need to file any final tax returns first.

Conclusion

The process of starting or growing a business comes with a lot of questions. One of the most common is, "Do I really need an FEIN?" And the answer, in many cases, is yes—especially if you’re hiring employees or want to keep your business and personal finances separate.

Applying for an FEIN is simple, free, and can be done online in just a few minutes. And while it’s one small piece of the puzzle, it’s an important step in building a compliant and sustainable business.

At Paper Trails, we help Maine and New England businesses every day with these kinds of questions. Whether you're navigating payroll setup, employee classification, or labor law changes, we’re here to help you make sense of it all.