EIN Verification: Why Your Business Needs it, How to Do It, and the Tools to Verify EIN

Employer Identification Number, or EIN, is a tax identification number the Internal Revenue Service (IRS) assigns to businesses. It’s like your business’ Social Security Number. An EIN gives your business a unique identity, separating it from businesses in the same industry or with similar names. On top of giving your business a unique identifier, EINs also help the government keep track of your business’ tax information, ensuring its compliance.

What is an Employer Identification Number (EIN)?

The EIN was introduced by the IRS through a Treasury Decision as part of the Tax Reform Act of 1974. The EIN was introduced as a measure to improve the tracking mechanism for tax-paying businesses.

EINs are 9-digit tax identification numbers, issued in an "XX-XXXXXXX" format. The first two digits of the EIN before the hyphen are based on the locations of the Campus of Record that assigns the EIN to a business. The 6/7 million series of EINs are reserved for Trusts, Estates, and Non-Profit/Exempt Organizations. This means that if the EIN has a 6 or 7 after the hyphen, the business associated with it is one of the aforementioned organizations.

EINs serve as unique identifiers for businesses that are separate from the identification number of their owner(s). This separation helps in distinguishing the tax records of the owner from those of the business. It also helps you keep your sensitive information safe by not having to share your SSN as a way to identify your business.

Having an EIN also verifies business identity for not just your business, but all businesses that have one. For your business, having an EIN presents an opportunity to build trust in your stakeholders as a government-recognized entity. For businesses that you interact or associate with, an EIN serves to act as an identity verification method that can help you and your business steer clear of suspicious entities or bad actors. This is why, it is important to know your own EIN as well as look up and verify the EIN of businesses that you and your business interact with.

Tanya Narayan Tanya has rich experience in scaling finance companies and currently handles product marketing at Signzy. https://www.signzy.com/us/