Business Banking

TIN vs. EIN: What is the difference?

While TIN and EIN are both tax identification numbers, they serve unique purposes. In this post we go over each number's definition and purposes, plus how to get your own.

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Contrary to common belief that TIN and EIN are similar and interchangeable, they aren’t. Although they are both tax ID numbers, they serve completely different purposes. TIN is used to identify taxable individuals in the U.S. while EIN is for identifying taxable business entities. Therefore, when filling out documents, you’ll want to ensure that EIN goes to business-related forms while TIN goes to personal forms. This is particularly important if you’re a business owner.

In this article, we compare TIN vs EIN and explain in detail when to use each. We also cover other different types of tax IDs and how to tell them apart so that you don’t fill the wrong information in your documentation because that can have very serious tax implications.

What is a TIN number?

Short for Taxpayer Identification Number, TIN is a nine-digit number that the IRS uses to identify and track taxable individuals in the U.S. You can use your TIN on tax returns, tax statements and other tax documents. Beyond taxation, you’ll also need the TIN to claim benefits and (in some cases) when applying for employment and credit.

It’s worth noting that TIN is actually an umbrella term for several numbers used by the IRS for different purposes. These numbers include SSN, ITIN, ATIN and PTIN, which we will discuss in detail in later sections. While the Social Security Number (SSN) is issued by the Social Security Administration (SSA), all the others are issued by the Internal Revenue Service (IRS).

What is an EIN number?

EIN or Employer Identification Number is a nine-digit number issued by the IRS to business entities for identification and tax purposes. Businesses have EINs in the same way that individuals have SSNs and other tax identification numbers. Since it’s issued by the federal government, the EIN is at times known as the Federal Tax Identification Number (FTIN) or Federal Identification Number (FEIN).

An EIN is only given to a legally formed business and it remains with the business for its lifetime as long as the business doesn’t change structure or ownership. In case the business changes structure and/or ownership, then it will require a new EIN.

Not all businesses are legally required to have an EIN. While all incorporated businesses like LLCs, corporations and nonprofits must have an EIN, unincorporated businesses like sole proprietorships and general partnerships can operate without an EIN. The same goes for single-member LLCs that don’t have employees. However, there are certain conditions under which the IRS requires that a business entity obtains an EIN. These conditions are:

  • When the business wants to start hiring employees.
  • If the business is subject to excise tax.
  • If the business files pension plan returns.
  • If the business files for Chapter 7 (reorganization) or Chapter 11 (liquidation) bankruptcy.

Even if your business is not required to have an EIN, it’s generally wise to get one anyway. In addition to easily reporting and filing tax returns, you may need an EIN for many other reasons:

When hiring employees

By law, you must obtain an EIN before hiring any employees. Similarly, you’re required to have one before buying a business that already has employees. The point is, you can’t have employees and not have an EIN.

Opening a bank account

Some banks don’t allow businesses to open accounts without an EIN, even if the business is a sole owner company or single-member LLC. This makes it necessary to have an EIN just in case the bank asks for it before approving your application to open an account.

But you should also know that there’s a good number of banks that don’t require your business to have an EIN before opening and maintaining a business bank account. It makes sense to consider these banks in case your business doesn’t have an EIN yet or if you simply don’t want a business bank account that mandates getting the nine-digit number.

To establish business credit

If your business has an EIN, you can use it to separate business finances from personal finances. That’s as simple as replacing your SSN with the business EIN. It may seem like a small step but it does establish your business as a separate legal entity, complete with its own credit. Once you’ve done that, you can go ahead and build business credit without affecting your personal credit score. A good business credit score will enable your company to qualify for more attractive loans and credit facilities.

To comply with state and local laws

There may be states and local governments that require every business to have an EIN for tax and licensing purposes. If that’s the case in your state, then make sure to obtain an EIN even if your business is exempt on federal level. You will want to check with your secretary of state whether or not an EIN is mandatory for your type of business.

What is the difference between a TIN and an EIN?

The main difference between EIN and TIN is that while an EIN identifies taxable businesses, a TIN identifies taxable individuals. Thus, you will use your TIN on all personal documentation and use an EIN when filing business forms (for business owners).

Another difference between TIN vs EIN is that the latter is only used on federal level, which is why it is at times called a Federal Employer Identification Number (FEIN). TIN, on the other hand, is used on federal as well as state levels.

The final difference is that a TIN is a general tax ID number. It’s actually a term that refers to multiple types of ID numbers, including EIN. Therefore, an EIN is a type of TIN.

How to apply for an EIN

To get a business EIN, you’ll need to register the business with the Internal Revenue Service using IRS form SS-4. To do so, start by establishing if you are eligible. You may qualify to get an EIN if:

  • The business for which you’re applying for an EIN is based in the U.S. or a U.S. territory.
  • You have a valid ID number like a Social Security Number. If you don’t have one, you may appoint a “responsible party” who has a valid ID number to obtain a business EIN on your behalf. This person will need to fill out the third-party designee part of form SS-4.

One you’ve established that you qualify for an EIN, go ahead and gather all the necessary information for filling form SS-4. Among other things, you’ll be required to provide:

  • Personal information, including your name, address and SSN.
  • The primary reason for applying for a business EIN. It could be any reason, from launching a business to restructuring an existing business or even hiring your first employee.
  • The date you started or acquired the business.
  • The industry of your business.
  • Number and types of employees that you expect to have within the next 12 months.
  • When the first wages will be (or were) paid.
  • The closing month of your fiscal year (for taxation purposes) and whether you prefer filing annual or quarterly tax returns.

All the above information goes into the IRS form SS-4. You essentially need to download and fill it out, then send it to the IRS for approval. When your application is approved, the IRS will issue your business with an employer identification number.

You have four options for submitting your information to the IRS: online, by mail, by fax and by telephone.

Online: this is the most preferred method of applying for a business EIN. Simply head over to the IRS website and fill out the form for an EIN application. It has an interview-like prompt that will guide you through the entire process. The IRS will issue you an EIN immediately when you’ve provided all the required information.

By mail: under this option, you’ll need to fill out form SS-4 and then mail to the IRS. They will review your information and if approved, you’ll get your EIN via mail. This process can take up to four weeks.

By fax: obtain IRS form SS-4, fill it out and then fax it to the IRS. Once it’s approved, the IRS will fax back your EIN within four days.

By telephone: call the IRS line through 267-941-1099 to obtain your company’s EIN. The line is open every weekday between 6AM and 11PM Eastern Time. It is not a toll-free number, so expect charges.

Types of tax ID numbers

As already mentioned, Taxpayer Identification Number or TIN is a collective term that refers to a range of numbers that the IRS uses for various purposes. Here’s a breakdown of all the tax ID numbers, their purposes and how to get one.

Employer Identification Number (EIN)

What is it?

An EIN is a type of tax ID that the IRS issues to businesses. While all incorporated businesses are required by law to have an EIN, unincorporated companies like sole proprietorships and general partnerships can operate without it.

Purpose of EIN

The IRS issues businesses with EINs for identification and tax purposes. You primarily use it to report and file business income taxes. Beyond that, you may also need a business EIN when opening a bank account, applying for a loan or obtaining certain licenses and permits.

How to get an EIN

You can obtain a business EIN by filing IRS form SS-4 and submitting it to the IRS either online, by mail or via fax. Alternatively, you can call the IRS through 267-941-1099 and request for an EIN.

Social security number (SSN)

What is it?

A social security number is a nine-digit number issued by the Social Security Administration (SSA) to all U.S. citizens. You must have a SSN if you wish to be employed or to collect social security benefits.

Purpose of SSN

Social Security Numbers are issued primarily for identification and taxation purposes. In that sense, a SSN serves the same purpose as an EIN. However, while SSNs are strictly for individuals, EINs are for businesses. Thus, you use your SSN when reporting and filing individual income taxes. Additionally, SSNs are used to determine eligibility for benefit payments, Medicare, social security and (in some cases) work.

How to get a SSN

Social Security Numbers are issued by the Social Security Administration. To apply for one, obtain and fill out form SS-5, then submit it to the SSA.

Individual Taxpayer Identification Number (ITIN)

What is it?

An individual taxpayer identification number is a tax ID issued by the IRS to individuals who are not eligible for SSN, such as U.S. visa holders. It is basically intended for foreign nationals and non-resident aliens who are required by law to file tax returns in the U.S.

Purpose of ITIN

The ITIN has only one purpose – tax reporting. Non-resident aliens and foreign nationals use it to report and file tax returns as necessary.

How to get an ITIN

You can apply for an ITIN by filling out IRS form W-7 and submitting it to the IRS. You will need to attach your federal income returns to the form. And keep in mind that it’s prohibited to have both an ITIN and SSN. Your ITIN application will be rejected immediately even if you’ve only filed but have not been approved for a SSN.

Adoption taxpayer identification number (ATIN)

What is it?

An adoption taxpayer identification number is issued by the IRS to parents who are adopting a child but are unable to secure a SSN for that child. If the adoption process is complete yet the child still doesn’t have a SSN, the IRS issues an ATIN as a stand-in document.

Purpose of ATIN

An adoption taxpayer identification number identifies an adopted child as a dependent. Having this document entitles adopting parents to certain tax deductions and returns.

How to get an ATIN

To get an ATIN, fill out the IRS form W-7A and submit it to the IRS. You’ll still use the same document, albeit with a longer procedure when adopting a child from a foreign country. You will also need to provide proof that the child in question legally lives in your home.

Preparer taxpayer identification number (PTIN)

What is it?

A PTIN is a tax ID number that the IRS issues to individuals who prepare or assist in the preparation of federal tax returns for a fee. The tax preparer must always include their PTIN on returns filed for clients.

Purpose of PTIN

The point of having PTINs is so that tax preparers don’t use their SSNs on client’s tax returns. Otherwise, having their SSNs on many tax forms would leave them vulnerable to identity theft. Every tax preparer must obtain a PTIN at the start of their career and use it when preparing a client's tax forms.

How to get an PTIN

Tax preparers can get a PTIN by filling out and submitting IRS form W-12. It’s a pretty straightforward process that takes just about 15 minutes to complete online. Should you want to mail the form, you can do so. But that might take up to six weeks before you get a response from the IRS.

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