A business tax ID number, also known as an employer identification number (EIN), is a unique nine-digit number assigned by the Internal Revenue Service (IRS). Consider the example of “ABC Incorporated”, a small business, having an EIN to differentiate itself from other business entities.
Securing an EIN is imperative for companies as it simplifies tax filing by allowing them to report and pay taxes accurately. Additionally, an EIN is necessary for opening business bank accounts and applying for licenses and permits. The introduction of the EIN has significantly streamlined business operations, making tax administration more efficient.