Global HR Glossary

What is an Employer Identification Number (EIN)? 

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business entity for tax purposes. This number is essential for various business functions, including tax filing, opening bank accounts, and employee payroll management. 

Purpose and Use of an EIN 

The EIN serves as a business's permanent identity for interactions with federal and state agencies. Businesses need it to:

• File business tax returns and monitor tax obligations.
• Open business bank accounts and secure business loans.
• Manage employee payroll, ensuring accurate reporting and withholding. 

Obtaining an EIN is one of the first steps in establishing a business's legal presence, crucial for compliance and operational functionality in the United States.