20+ Difference between Tax ID And EIN (Explained)

Because dealing with taxes is one of our most typical experiences throughout our lives, acquiring a taxpayer identification number is almost unavoidable for everyone (or TIN).

The Internal Revenue Service (IRS) uses various acronyms to distinguish between the various categories of taxpayers. Because a variety of numbers may be used for reasons of tax identification, it is essential to be aware of each number and the distinctions between them.

Table of Contents

Comparison Between Tax ID And EIN

Parameter	Tax ID	EIN
How to get one	Complete the IRS Form W-7, Application for Individual Taxpayer Identity Number, and submit substantiating proof of your foreign or resident status and official identification papers to get a taxpayer identification number (TIN) from the IRS.	When you have finished registering your company entity with the Secretary of State in your state, you can submit your application to the Internal Revenue Service (IRS). Applying online is quick and painless, and completing the SS-4 form to fax in is also free.
Definition	In the context of federal income tax and other types of taxes, the primary function of tax ID numbers is to monitor payments made to people. These numbers have also evolved to serve various additional identifying functions in recent years.	A federal tax identification number for companies is known as an Employer Identification Number (EIN). Even though it is referred to as an identifier for “employers,” you do not need to be in the employment business to get an EIN.

Major Differences Between Tax Id And Ein

What exactly is a Tax ID?

The Internal Revenue Service (IRS) uses the term “Tax Identification Number” (TIN) to refer to any number used for this purpose.

The Internal Revenue Service (IRS) assigns each person, company, and other entity a unique nine-digit number known as a taxpayer identification number (TIN) (IRS). In the United States, individuals’ tax ID numbers are used largely to track any money owed to them.

Key Differences: Tax ID

Social Security numbers (SSN), individual taxpayer identification numbers (ITIN), and employer identification numbers (EIN) are the three basic classifications of tax EIN.

The IRS allows private individuals and companies to submit an application for a tax identification number to track their respective tax obligations.

These taxpayers include individuals, businesses, and tax-exempt organizations. When seeking loans or employment, TINs are also requested from applicants.

The Internal Revenue Service (IRS) assigns taxpayers a nine-digit tracking number to ensure compliance with tax regulations.

Except for social security numbers, which the Social Security Administration provides, all tax identification numbers are issued by the Internal Revenue Service.

Taxpayers are required to enter their taxpayer identification number on all papers relating to taxes as well as benefit applications.

There are several variations of tax identification numbers, including the person’s tax identification number and the adoption tax identification number.

What exactly is EIN?

For tax reasons, companies must have a unique identifier known as an Employer Identification Number (EIN). EINs function similarly to TINs. However, they’re used to identify companies rather than people.

A company must have a federal employer identification number to operate legally in the United States. All businesses and people that employ others require a federal employer identification number.

Key Differences: EIN

The Internal Revenue Service (IRS) assigns a business entity a nine-digit number known as an EIN to identify the firm to administer tax laws.

EINs are often given out to report employment taxes, file yearly tax returns, issue payroll records, pay federal taxes, and other other purposes.

To submit an application for an EIN, you must possess a valid tax identification number, such as a social security number.

A nine-digit number that is completely unique to a particular corporate organization is known as an employer identification number (EIN).

Before they are allowed to begin operations, all companies that satisfy certain requirements are required to get an EIN.

Applying for one does not cost anything; applications may be found on the IRS website.

EINs enable companies to create bank accounts, seek credit, and facilitate tax information reporting.

Contrast Between Tax ID And EIN

Application:

Tax ID- Because a Taxpayer Identification Variety might relate to several different things, you must be more explicit about which number you want. There are five distinct varieties of Individual Taxpayer Identification Numbers (ITINs).

The Social Security Administration is only responsible for issuing one of them (the SSN), while the Internal Revenue Service is responsible for issuing the other four.

EIN- The Internal Revenue Service (IRS) provides business organizations with an Employer Identification Number (EIN), which is also known as a Federal Tax Identification Number.

In contrast to a TIN, an EIN may be received without delay and at no cost when the verification process has been completed. Before applying for an EIN, you are required to examine the prerequisites imposed by your state.

What it means:

Tax ID- The phrase “tax ID” may be used to refer to almost everything that has to do with payments paid to the government.

You could be compelled to pay several taxes, including a state income tax, a sales and use tax, a property tax, a municipal tax, a corporate tax, and/or other taxes of a comparable kind, to a wide range of state and county authorities.

EIN- The abbreviation EIN stands for “Employer Identification Number,” which is what the number represents. This is the number that has been assigned to your firm by the Internal Revenue Service (IRS) so that you may file a tax return on behalf of your business with them.

Purpose:

Tax ID- It is the responsibility of the Internal Revenue Service, sometimes known as the IRS, to issue tax identification numbers to make enforcing tax laws more straightforward.

The Internal Revenue Service, banks, and other organizations can identify an entity using a Federal tax ID number.

EIN- To a considerable extent, the Internal Revenue Service (IRS) relies on tax identification numbers, such as employer identification numbers (EIN), to record payments made to individuals for federal income tax and other taxes.

Owners of businesses are needed to get an Employer Identification Number (EIN) before they may open a bank account in the name of their company, file their tax returns, or apply for business licenses (EIN).

Who needs them:

Tax ID- To operate or legally conduct business in the United States without an SSN, you will require a Taxpayer Identification Number (TIN). Proof of eligibility for a TIN is required if you are a Non-resident Alien (NRA) with tax obligations in the United States.

Non-citizens who have made the United States their permanent home must file and pay federal income tax returns beginning with the year they entered the nation.

EIN- Opening a company bank account, making employee payments, and applying for necessary permits all call for an EIN.

Corporations, employers, estates of the deceased/trusts, government organizations, nonprofits, partnerships, and certain single proprietors must provide their EIN when submitting business tax returns.

Identification:

Tax ID- Internal Revenue Service (IRS) employees can differentiate between corporate and non-corporate businesses by using tax identification numbers, which are one-of-a-kind identifiers that consist of nine digits and are called tax identification numbers. Individuals may be given one of these numbers to identify themselves (TINs).

The Social Security Number (SSN), the Individual Taxpayer Identifying Number (ITIN), and the Employer Identification Number (EIN) are the three sorts of identification numbers that are used in the United States the most often (EIN).

EIN- Employer Identification Numbers, often known as EINs, are required by the Internal Revenue Service (IRS) for every entity that wants to participate in the nation’s tax system.

These numbers are also sometimes called tax identification numbers (IRS). It is comparable to a social security number, but its use is exclusively restricted to matters of financial transactions. For a company to be properly recognized for tax purposes, it is essential for the company to obtain an EIN.

Frequently Asked Questions (FAQs)

Is an EIN and a sales tax ID the same thing?

If you own a company that does business in a state that imposes a sales tax, you must get your company’s sales tax identification number.

This is the case regardless of whether or not the state imposes the tax. While EINs can only be obtained via the federal government, these may come from either the state or the federal government.

Even if I have an EIN, is there any way to verify the legitimacy of a company?

For a small fee, you may look for the EIN of the corporation or firm on SEC filings or check the company’s credit report. Both of these options are available to you.

You might also make use of any premium EIN database instead. You may also examine the company’s credit report if it is publicly available, which is the case with most firms and businesses.

Is a tax ID and a business ID the same thing?

The Internal Revenue Service (IRS) assigns businesses a unique “Business ID Number,” which is a subset of the more general “Tax Identification Number.”

A company ID, much like a social security number, is a one-of-a-kind identifying number that will never become invalid or be given to any other businesses.

When is the right time to apply for a Tax ID?

Any time of the year is acceptable for submitting an application for a tax identification number for sole proprietorships and general partnerships.

However, to submit an application for a tax ID, corporations and limited liability companies (LLCs) must first have their formation document (Articles of Incorporation or Articles of Organization) approved by the relevant state agency and their formation date validated by an official document.

What Should Be Done If Your EIN Is Misplaced?

If you have misplaced your EIN, the IRS will notify you when it was granted. In addition, you may call the bank where you have your regular accounts to see if they can help you retrieve it.

It will also be on your prior tax returns if you have any. Before interacting with a customer service representative, verify that you have the necessary identification handy.