Federal ID Number

Meaning & Definition

The Federal ID Number is the identifying number the IRS (Internal Revenue Service) assigns as a way for small businesses in the United States to be identified when reporting taxes and filing payroll taxes to the government. This also includes identification of employers for purposes of federal taxation. It does not apply to the Indian taxation system.

Important features of the Federal ID Number 

• Identification of businesses for federal taxation purposes.
• For filing of business tax returns.
• Payroll processing and tax reporting.
• Open a bank account for your business (in the United States).
• Supports in hiring employees and compliance management.
• Provide W-2 and 1099 types of tax forms to employees.

Legal Compliance 

• The United States Internal Revenue Service (IRS) issues and governs this form.
• It is required for all companies with employees in the U.S.
• You will need to file this form with your federal tax return and when you file payroll taxes.