An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses and other entities for tax purposes. For instance, a business owner might need their EIN to file taxes, open a business bank account, or hire employees.
EINs are crucial for businesses to track their income and expenses accurately, ensuring compliance with tax laws and avoiding costly penalties. Historically, businesses were assigned EINs upon registration, but now they can obtain them online or by mail.