What is a FEIN?
To make managing your business’ finances easier it’s a smart idea to set up a business bank account. This will help you keep your personal and professional finances separate, making reporting and organization easier in the long run. Depending on your business structure you will need a Federal Employer Identification Number to create a corporate account.
Think of your Federal Employer Identification Number (FEIN)* as your business’ social security number. This is an ID number assigned by the IRS to all businesses operating in the United States when you file your business tax returns and other official documents.
You Need a FEIN if You
Are a Corporation or Partnership
File Certain Taxes
Withhold Income Taxes
Have a Keogh Plan
How to Apply for a FEIN
You can apply for a FEIN through the IRS website. This process should take less than 20 minutes and needs to be done in one sitting otherwise the system will kick you out. Once you have a FEIN, you can hire employees, create retirement plans, and start your corporate banking account.
To Apply for a FEIN you Need
Reason for FEIN
Your Name and SSN
Why You Need a Business Bank Account
While it’s not a requirement to have a corporate account to run your own business, it certainly has its rewards. Primarily, it’s easier to manage your taxes, accounting, and reporting because you won’t need to filter out personal transactions or keep your personal and business finances in the same space.
Creating a corporate account shows you’re a credible business and it can be more convenient for your customers. Personal accounts aren’t set up to receive credit or debit card payments, which is a must as 81% of people prefer to pay with card. Businesses that don’t provide the option to pay with credit/debit are likely losing out on money too – people are willing to pay up to 83% more when paying with a card over cash.
In addition to simplification and improved customer experience, opening a business account can position your business for financial growth. By starting your account early, you can build your credit history from day one. Then, when it comes time to expand, you’ll have a better chance applying for business loans.
The bottom line is your bottom line will be better off if you open a corporate banking account.
Like with personal banking accounts, you need to research which bank to use for your business purposes. You should take fees, sign-on offers, interest rates and more into consideration.
*FEIN can also be written as EIN
To Get a Corporate Account you Need
FEIN or SSN
Doing Business As
Rosa Lee Timm
Division President & CMO
Venture Fund Associate
Director of Financial Planning & Analysis