What Does it Mean to Have a Tax ID Number?
For the IRS to conduct its business, it must have an easy way to identify each individual and business. To do this, they require each individual and business to have a tax ID number. While most individuals use their social security number for filing taxes, most businesses must have a special business tax ID instead.
SSN, ITIN or EIN: What’s the Difference?
There are three main categories of tax ID numbers: social security number (SSN), employer ID number (EIN) and individual taxpayer ID number (ITIN). For businesses, the EIN is the most important tax identification number. Despite the name including employer, it suits all businesses, even those with no employees. Social security numbers and ITINs are used for individuals. Generally, the ITIN is for those not eligible for an SSN, such as non-resident aliens or resident aliens not yet eligible for a social security number.
Tax ID Numbers for Businesses
Most businesses require a special tax ID number for their filings with the IRS. Many other legal documents for businesses, including loan applications, bank account applications and permit applications, also require a tax ID. Therefore, one of the first actions to take after setting up your business is to apply for an EIN.
Are There Exceptions?
There are cases in which business owners can use their own social security number rather than an EIN for filing taxes for their business. The two exceptions are sole proprietorships and LLCs, as long as the LLC does not have any employees. In these cases, the business owner can use his or her social security number in place of the tax ID number. However, even sole proprietors might need a tax ID number under certain circumstances, such as excise tax returns or pension filings.
You have your choice of business structure, which might impact what type of tax ID number you need. Start your tax ID application to receive your EIN number by filling out the form here. Alternatively, complete a sole proprietorship application and use your social security number instead. Our support team is available 24/7 to assist you with any questions you might have about filing these applications.
Do I Need an ITIN or Social Security Number to Get an EIN?
There are ways to get an EIN for your company without having either a Social Security number or an ITIN, but in most cases, you do use those other tax identifiers in your application. That’s because the IRS does require the person who takes responsibility for the registration to have one of these. If you do not have either identifier, you have two options.
- File for either a SSN or ITIN before applying for an EIN so that you can be listed as the point of contact for the company.
- Engage an accountant or lawyer willing to act as that contact for the company and submit their information so they can receive paper records regarding your EIN.
What Are the Differences Between a SSN and an ITIN?
The main difference is that the Social Security number is for those who are eligible for Social Security benefits, either at retirement or in the event of a disability. For residents of the U.S. and non-residents who own businesses in the country, the ITIN provides and individual tax identification option outside of Social Security. This is an important avenue for those who do not qualify for a Social Security number.
Can I Use a Tax ID Number for More Than One Business?
Generally, no. If your business needs its own EIN for any reason, you need to use a unique one that is just for that entity. Entrepreneurs with multiple companies they own as the sole owner, either through sole proprietorship or a single-member LLC, might have the option of lumping all their business taxes under one tax return by using their Social Security numbers and filing with Schedule C. Even then, if any of those businesses hire employees or seek bank loans, they will need their own EIN, and they will not be able to share.
If you are ready to get started, navigate to our application page and select the type of entity you need to register.