What is an EIN? The federal tax ID, explained.

Think of an EIN as the Social Security Number for a business. Just as the IRS uses your SSN to identify you on your personal tax return, it uses your EIN to identify your LLC, Corporation, or other entity on the business return. Banks use it to verify the entity when you open a business account. Payroll providers use it to file the entity's payroll tax returns. The state may also reference it when you register for state employer taxes.

The EIN format is two digits, a hyphen, then seven digits: XX-XXXXXXX. The first two digits used to indicate which IRS service center issued the number, but that meaning has largely been retired with the move to online issuance. There is no fee to obtain an EIN; the IRS issues them for free directly through irs.gov.

Once issued, an EIN is permanent for the life of the entity. You do not renew it. If the entity is sold or restructured significantly, a new EIN may be required. If the entity dissolves, the EIN is not "released" or re-used; it stays associated with that entity in IRS records.