A Federal Tax ID or Employer Identification Number (EIN) is basically a Social Security Number for your business. The IRS uses it to identify your entity, and it must be included on all your tax filings. Also, banks usually require an EIN to open a business bank account. Plus, other companies may require an EIN number to open an account, establish a relationship or to purchase items from that company.
If you currently operate your business as a sole proprietorship or general partnership and want to setup a corporation or form an LLC, you must obtain a Federal Tax ID Number (EIN) for your business.