what is a federal id number

A Federal ID Number, also known as an Employer Identification Number (EIN) or Tax ID Number (TIN), is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities operating in the United States for the purposes of identification. It is used for tax administration and must not be used for any other purpose. When the number is used for identification rather than employment tax reporting, it is usually referred to as a Taxpayer Identification Number (TIN) . The EIN is required by law for many types of business entities, including C Corporations, Limited Liability Companies, and Partnerships. Sole Proprietorships are not required to have an EIN, but it is optional. The EIN is used to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits. It can also be used to establish a separation between the business and the owners personal assets, and to provide some privacy protection.