Introduction
When starting or managing a business, you’ll often hear the terms Tax ID Number and EIN used interchangeably. But what is the difference between a Tax ID Number and an EIN? Let’s clarify the confusion and help you understand which one applies to your situation.
What Is a Tax ID Number?
A Tax Identification Number (TIN) is a broad term used by the IRS for any number used to identify a taxpayer. There are several types of Tax ID numbers, including:
- Social Security Number (SSN) – for individuals
- Employer Identification Number (EIN) – for businesses and estates
- Individual Taxpayer Identification Number (ITIN) – for certain non-residents
In short, TIN is the umbrella term for all these numbers used for tax purposes.
What Is an EIN?
An Employer Identification Number (EIN) is a specific type of Tax ID number assigned by the IRS to:
- LLCs and corporations
- Non-profits
- Trusts and estates
- Partnerships
- Employers who hire employees
EINs are used to file taxes, open business bank accounts, apply for licenses, and more.
So, What’s the Difference?
| Tax ID Number (TIN) | Employer Identification Number (EIN) |
|---|---|
| General term for IRS tax numbers | A specific type of Tax ID |
| Includes SSN, ITIN, and EIN | Only used by businesses, estates, and certain entities |
| Used by individuals and organizations | Assigned strictly for business or entity use |
In Simple Terms:
All EINs are Tax ID numbers, but not all Tax ID numbers are EINs.
Which One Do You Need?
- Starting a business or hiring employees? You’ll need an EIN
- Filing personal taxes? You’ll use an SSN or ITIN
- Managing an estate or trust? You’ll also need an EIN
Conclusion
What is the difference between a Tax ID number and an EIN? A Tax ID is a general term that covers several IRS-issued identifiers. An EIN is a type of Tax ID specifically for businesses and legal entities. Knowing the distinction ensures your business stays compliant with federal requirements.
