An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities operating in the United States. It functions similarly to a Social Security number for individuals, but identifies businesses. It is utilized by the IRS to identify taxpayers and is essential for various business activities, such as opening a bank account, filing taxes, and hiring employees.
This number is crucial for businesses to maintain compliance with federal tax regulations. It facilitates the proper reporting of income and expenses, ensures accurate tax payments, and enables the business to operate legally. Furthermore, its a key identifier for interacting with various government agencies and financial institutions. Its historical context stems from the need for the IRS to efficiently manage and track the increasing number of businesses operating within the country.