Difference between EIN and FEIN
The terms EIN and FEIN are often used in the context of business and tax-related matters, but many people are unsure about the difference between the two. An EIN, or Employer Identification Number, and a FEIN, or Federal Employer Identification Number, are both unique identifiers issued by the Internal Revenue Service (IRS) in the United States. While they serve similar purposes, there are distinct differences between the two.
EIN
An EIN is a nine-digit number assigned to businesses, estates, trusts, and other entities for tax purposes. It is used to identify a business entity for tax administration purposes and is required for various financial transactions, such as opening a bank account, applying for a business license, or hiring employees. An EIN is not limited to employers; it can be used by any entity that needs to file taxes or report tax information to the IRS.
FEIN
On the other hand, a FEIN is a specific type of EIN that is assigned to employers. It is used to identify employers for tax purposes, particularly for purposes related to employment taxes, such as income tax withholding, Social Security, and Medicare taxes. The FEIN is also used to report other tax information, such as employment tax returns and wage and tax statements.
Difference Between EIN and FEIN
The main difference between an EIN and a FEIN lies in their intended use. While an EIN is a general identifier for any entity, a FEIN is specifically for employers. Here are some key points to differentiate between the two:
1. Purpose: An EIN is used for various tax purposes, while a FEIN is specifically for employment tax purposes.
2. Eligibility: Any entity, including individuals, can obtain an EIN, whereas a FEIN is only issued to employers.
3. Application: To obtain an EIN, you can use the IRS website or call the IRS Business Tax Line. A FEIN is automatically assigned to employers when they register for an EIN.
4. Use: An EIN can be used for a wide range of financial transactions, while a FEIN is primarily used for employment tax-related matters.
In summary, while both EIN and FEIN are issued by the IRS and serve as unique identifiers for tax purposes, they have different uses and are intended for different types of entities. Understanding the difference between the two is crucial for businesses and individuals to ensure compliance with tax regulations and streamline their financial processes.
