What is Employer Identification Number?
An Employer Identification Number (EIN) is a unique nine-digit identifier issued by the Internal Revenue Service (IRS) to businesses in the United States for tax purposes. Commonly known as a Federal Tax Identification Number, it functions as the business counterpart to an individual’s Social Security Number (SSN).
An EIN is crucial for several reasons, as it serves to identify a business entity in various legal and financial matters, such as:
- Filing business taxes.
- Opening a business bank account.
- Hiring employees.
- Applying for business licenses or permits.
- Managing payroll and employee benefits.
- Establishing credit for the business.
How HR teams use this term
HR teams usually use Employer Identification Number when they write policies, explain employee communication, review payroll or leave records, or keep employee data clean in an HRMS.