An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses and organizations for tax purposes. It is often referred to as a Federal Tax Identification Number and is used to identify a business entity in various financial and tax-related transactions. Businesses typically need an EIN to open a bank account, apply for loans, and file tax returns. Sole proprietors may not require an EIN if they do not have employees, but obtaining one can help separate personal and business finances.