EIN, TIN, ITIN: What are the Differences?

If you are planning to start a business in the US, which means you will generate sales and receive payments, the terms EIN, TIN and ITIN will come up frequently. Therefore, it is useful to learn what they mean.

A Taxpayer Identification Number which is abbreviated as TIN is a generic term used by the Internal Revenue Service (IRS) and it is a unique number used for tax and identification purposes.

Although TIN numbers can be used for identification, they are primarily used to track payments to individuals for federal income tax and other tax purposes.

There are three general types of taxpayer ID numbers:

  • Social Security Number,
  • Employer ID Number,
  • Individual Taxpayer Number.

A Social Security Number or SSN is the most common identifier for personal identification and tax purposes.

Employer ID Number (EIN) is a federal tax identification number for businesses. Although it is labeled as an identifier for employers, you do not have to have employees to need an EIN.

Individual Taxpayer ID Number (ITIN) is a nine-digit number issued by the Internal Revenue Service (IRS) assigned to individuals who must have an identifying number, but who are eligible for neither a Social Security Number or an Employer Identification Number.

ITINs are for reporting purposes only and they cannot be used for identification purposes. Let’s say that you have a single partner LLC or sole proprietorship, you do not have to apply for an EIN. You can use your Social Security Number for tax transactions. However, most single partner LLCs and sole proprietorships obtain an EIN in order to separate their companies and their own tax liabilities. An EIN looks more professional than an SSN when doing business with third-party companies and contractors.

The EIN also gives information about your company whereas the SSN provides information about you. Thus, using an EIN is better than using an SSN for avoiding the risk of personal identity theft.

If you want to obtain an EIN, ein-itin.com provides this service for you. All you have to do is submit your application through our website.