Is an Entity Number the Same as an EIN?
A business uses separate identifiers for state and federal purposes. Learn the distinct functions of an entity number and an EIN for proper administration.
An entity number and an Employer Identification Number (EIN) are not the same; they are distinct identifiers issued by different government bodies for separate functions. An entity number is used for state-level registration and compliance, while an EIN is for federal tax administration. Understanding the difference is important for proper business management and legal compliance.
Understanding the Entity Number
An entity number is a unique identifier assigned by a state government agency, often the Secretary of State’s office, when a business is legally formed. This number is created when you file formation documents, such as articles of incorporation for a corporation or articles of organization for an LLC. Its function is to track the business for state-specific administrative and compliance obligations.
This state-issued number is the primary way the state identifies your business in its records. You will use it when filing required annual or biennial reports and when paying state-level franchise taxes or other fees. To locate your entity number, you can refer to your business’s formation documents or search the online business database on your state’s Secretary of State website.
Understanding the Employer Identification Number (EIN)
An Employer Identification Number (EIN) is a nine-digit number assigned by the federal government’s Internal Revenue Service (IRS). It is also referred to as a Federal Tax Identification Number. The main purpose of an EIN is to identify a business for federal tax reporting, including filing annual income tax returns and reporting employment taxes.
Beyond federal tax filings, an EIN is necessary for other common business activities. You will need an EIN to open a business bank account, apply for business licenses and permits, or establish a line of credit. Business owners can find their EIN on the original confirmation notice from the IRS, known as Form CP 575, or on previously filed federal tax returns.
Key Differences and When to Use Each Number
The distinction between these numbers lies with the issuing authority and their function. An entity number is a product of state government, used to manage a business’s legal standing within that specific state. In contrast, an EIN is issued by the federal IRS and is used nationwide for federal taxation and financial operations. The format also differs; an EIN is always a nine-digit number, whereas the format of a state entity number can vary by state.
In practice, you will use these numbers in different scenarios. When it is time to file your required annual report with the state to keep your company in good standing, you will use your state-assigned entity number. This number is also used when paying state-specific franchise taxes or fees.
Conversely, your EIN is used for all federal interactions. When you hire your first employee, you will need the EIN to report and remit payroll taxes to the IRS. It is the number you will provide on your annual federal income tax return and when you apply for a business loan or open a checking account in the business’s name.