EIN vs. TIN: What’s the Difference and Which Do You Need?

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An employee identification number (EIN) is a type of of tax identification number (TIN). There are many tax identification numbers including Social Security numbers, Individual Tax Identification numbers (ITIN) and state tax ID numbers. Think of a TIN as a umbrella term for different types of identification numbers.

Types of Tax Identification Numbers

What Is a TIN?

A taxpayer identification number (TIN) is a broad term used by the IRS for any type of number used to track taxpayers This number is used by individuals, businesses and tax preparers to report taxes. There are different types, each with a specific purpose:

• SSN: This is the most common form of TIN for U.S. citizens and permanent residents. It’s used for personal tax filings and benefits tracking.
• ITIN: If you’re a non-U.S. resident or someone ineligible for an SSN but who still needs to file taxes, you’ll need an ITIN.
• EIN: As previously mentioned, this is used for businesses, nonprofits and certain estates.

What Is an EIN?

An employer identification number (EIN) is a unique nine-digit number issued by the IRS to businesses, nonprofits, estates and trusts for tax purposes. Think of it as a Social Security number (SSN) for your business. Here’s why you might need an EIN:

• Required for hiring employees: If you plan to have employees, an EIN is essential for payroll and withholding taxes.
• Necessary for opening a business bank account: Most banks require an EIN to set up a business account or apply for a business credit card.
• For business tax filings: If your business needs to file taxes — which it likely does — an EIN is a must.

In short, it is a vital number for anyone running a business or nonprofit organization. Businesses with employees, or those filing as a corporation or LLC, will almost certainly need an EIN.

EIN vs. TIN: Key Differences

Now that we’ve covered the basics, let’s dive into the key differences between EINs and TINs. Here’s a side-by-side comparison to help make it clear:

Who Needs an EIN or TIN?

Anyone who needs to file taxes, open a business account or report income to the IRS may need a TIN –while an EIN is specifically required for businesses, estates and certain trusts.

Who needs a TIN:

• U.S. citizens filing personal tax returns via their SSN
• Resident and nonresident aliens who aren’t eligible for an SSN, via ITIN
• Adoptive parents via adoption tax identification number (ATIN)
• Tax preparers via preparer tax identification number
• Anyone earning income in the U.S. and required to report it to the IRS

Who needs an EIN:

• Businesses: LLCs, corporations, partnerships
• Sole proprietors with employees or retirement plans
• Nonprofit organizations
• Trusts, especially irrevocable ones with income
• Estates managing income-producing assets

Common Real Life Scenarios EIN vs. TIN

• If you’re sole proprietor with no employees, you don’t need an EIN, you can use your Social Security Number. However, if you have employees, you will need to get an EIN.
• Sometimes freelancers are required to provide an EIN even though the IRS doesn’t legally require it. Banks ask for an EIN from freelancers for internal compliance, privacy and record keeping.
• If you’re self-employed and have no employees, you can use your SSN. The moment you have employees you are required to get an EIN.

When To Use EINs vs. TINs

There are different situations where you may need either an EIN or a TIN. Let’s break down when to use each one:

Now that we know when to use an EIN vs. TIN, let’s go over how to get them.

How To Apply for an EIN

Applying for an EIN is free and can be done online. Here’s a quick guide on how to apply: 

• Choose how to apply: You can apply online, by phone, by fax or by mail. Online is the fastest option. 
• Complete Form SS-4: You’ll need to provide details about your business, including its name, structure (LLC, corporation, etc.) and contact information. 
• Apply online: Visit the IRS EIN application page. 
• Apply by fax: Send your completed Form SS-4 to (855) 641-6935. 
• Apply by mail: Mail your completed Form SS-4 to the IRS. 
• Get your EIN: If you apply online, you’ll get your EIN immediately. If you fax or mail it, it can take a few days or even weeks. 

How To Apply for a TIN (SSN or ITIN)

To apply for a TIN, the process depends on which type you need:

To Apply for an SSN:

1. Fill out Form SS-5 (Application for a Social Security Card).
2. Submit original documents that prove your identity and U.S. citizenship or immigration status.
3. Submit in person or by mail to your local SSA office.

To Apply for an ITIN:

• Mail your application to the IRS at the address on the form.
• Fill out Form W-7.
• Attach a valid tax return (unless you qualify for an exception).
• Submit supporting documents like a passport to prove your identity.

EIN vs. TIN: At a Glance

Common Misconceptions About Tax ID Numbers

There are a few myths about EINs and TINs that can be confusing. Here are those myths, debunked.

• “EINs are only for large businesses.”
  Not true! Even sole proprietors with employees need an EIN to operate legally.
• “TINs and EINs are interchangeable.”
  While all EINs are TINs, not all TINs are EINs. TINs also include SSNs and ITINs, which are for individuals.
• “You only need an EIN if you have employees.”
  Incorrect! An EIN is also required for other purposes, like opening a business credit line or filing certain tax forms, even if you don’t have employees.

Final Take To GO

If you’re a business owner, learn how to apply for an EIN and get started with your business tax filings today. Ready to apply for your tax ID? Head over to the IRS website to start the process today and make sure you’re all set for your next tax filing.

For more helpful resources, explore our articles on tax filing for business owners and filing as an independent contractor. Take control of your tax process and ensure you have the right paperwork in place.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

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