- Tax ID comprises five different types of numbers, including Social Security numbers and employer identification numbers.
- You need tax ID numbers in order to file tax returns and pay your taxes.
- You can find or apply for most types of tax ID numbers through the IRS, SSNs being a notable exception.
- This article is for business owners looking for the proper type of tax identification number to operate their business and comply with tax payment requirements.
Tax identification numbers and corporate numbers are similar concepts with some important distinctions. A tax ID number is used to identify different kinds of taxpayers, while a corporate number is used by limited liability companies (LLCs) or other corporations. Understanding the differences between the types of identification numbers makes filing taxes easier, so keep reading to learn the different kinds of ID numbers you might need to operate your business.
What is a tax ID number? A tax identification number, or TIN, is an ID number the IRS uses to administer tax laws. The purpose is to assign a number to each taxpayer, whether that's an individual or a business. Each person's or business's number is unique to them, which makes it easy for the government to track.
This number is assigned by the IRS and used by businesses to file tax returns, pay taxes and secure approval to conduct other business operations. When you first start a business, you apply for a taxpayer ID number through the IRS.
Key takeaway: The IRS assigns your business a tax identification number, which you'll use to file tax returns, pay taxes and conduct other business operations.
What is a corporate number?
Corporations and LLCs receive a corporate number upon approval of their articles of incorporation. This number is equivalent to the federal tax identification number, or an employment identification number.
"A corporate tax ID is interchangeably used with EIN, which applies to entities other than corporations as well," Selva Ozelli, international tax attorney and CPA, told Business News Daily.
In California, however, corporations receive seven-digit corporation numbers from the California Secretary of State or Franchise Tax Board, and LLCs receive a 12-digit corporate number. The company can then use this number to apply for an EIN. In most states, though, a corporate number is the equivalent of an EIN.
Key takeaway: Corporate numbers are the same as federal tax and employer identification numbers, unless your business is based in California.
What is the difference between a tax ID number and a corporate number?
The term "taxpayer identification number" refers to five different types of numbers used to identify taxpayers:
- Social Security numbers
- Employer identification numbers
- Individual taxpayer identification numbers
- Taxpayer identification numbers for pending U.S. adoptions
- Preparer tax identification numbers
For businesses, EINs are the most relevant tax ID numbers. These help the government track business taxation at the federal level. Sole proprietorships and single-member LLCs may use Social Security numbers as their business's tax ID number.
The terms "corporate number" and "EIN" can be used interchangeably. The official term used by the IRS and other government entities is "employer identification number" or "federal tax identification number."
Tax ID numbers are used for federal taxation and apply to both individuals and businesses, whereas corporate numbers and EINs apply solely to businesses.
Key takeaway: There are five different kinds of tax identification numbers, including employer identification numbers. Corporate numbers and EINs are considered the same.
Types of tax identification numbers
The five types of tax ID numbers differentiate the wide range of taxpayers. Here's a detailed look at each type.
Employer identification number (EIN)
This is also referred to as a "federal tax identification number" or "federal employer identification number." EINs identify business entities, like Social Security numbers for businesses.
EINs for publicly traded companies and nonprofits are public information. Nonprofit EINs are available so that people and businesses donating to the nonprofit can confirm that it holds tax-exempt status from the IRS. This is a good way to confirm a nonprofit is registered correctly with the IRS before donating to the organization. Businesses can apply for an EIN through the IRS website.
"Business that are registered with the IRS typically use an employer ID number for the business identity," said Ozelli. "An EIN is used by all other types of businesses, even if the business has no employees … The single-member LLC business type is an exception. If you are the sole owner of an LLC, you should use your Social Security number, not the EIN of the business."
Social Security number (SSN)
To receive a Social Security number, you either need to be a U.S. citizen or a legal alien. An SSN is a nine-digit identification number that is formatted like "NNN-NN-NNN." An individual needs this number to get a job and to collect Social Security and other government benefits. The Social Security Administration stresses the importance of keeping these numbers safe and private. Some businesses, like sole proprietorships, use the owner's personal Social Security number on tax forms related to the business.
"An employer ID and a Social Security number are both tax IDs," said Tom Wheelwright, certified public accountant and CEO of WealthAbility. "Nonresidents of the U.S. can get a separate individual taxpayer identification number to report your personal income to the IRS."
Individual taxpayer identification number (ITIN)
Formatted just like a Social Security number, an ITIN is "a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security number," according to the IRS.
Taxpayer identification number for pending U.S. adoptions (ATIN)
An ATIN is a temporary nine-digit code for those adopting a U.S. citizen or resident child for cases where the adopting taxpayers are unable to get a Social Security number before filing taxes. This is a very specific use case, and this form of tax ID is personal in nature.
Preparer tax identification number (PTIN)
Paid tax preparers are required to use PTINs on any tax returns they prepare. You can apply for this number online or with a paper form.
Additionally, there are state tax ID numbers, which are only used to report state taxes. [Interested in finding the right online tax software to help your small business? Check out our reviews and best picks.]
Key takeaway: There are several kinds of tax identification numbers. In your dealings as a small business owner, you're most likely to use your Social Security number, employer identification number or individual taxpayer identification number.
Where can I find my tax ID numbers?
Understanding the different types of tax ID numbers available to your business is the first step. It's also important to know what paperwork is required and where you can access this information.
Social Security number
You can find your SSN on your Social Security card. You have to provide it on several important documents, like your W-2 form, tax returns and bank applications.
If you lost your card and can't remember your number, you can fill out a Social Security card application online, which you can print and turn in to your local Social Security office along with the appropriate documents. If you want to check your SSN online, you can set up your Social Security Administration account as long as you can provide the appropriate identification.
Employer identification number
The IRS assigns your EIN. To obtain one, you will need to complete and file Form SS-4. You can file the form online, by mail or fax, or over the phone if your business started outside of the United States.
Individual taxpayer identification number
To file for your ITIN, mail a completed Form W-7, proof of your identity and any foreign state documentation to the IRS at this address:
Internal Revenue Service Austin Service Center ITIN Operation P.O. Box 149342 Austin, TX 78714-9342
You can also submit your ITIN application in person through an IRS-authorized Certifying Acceptance Agent program, or contact your local IRS Taxpayer Assistance Center to have the IRS send you your ITIN by mail.
Taxpayer identification number for pending U.S. adoptions
You can get your ATIN by filing Form W-7 A. You may also get this application in person at the IRS office or by calling 1-800-829-3676.
Preparer tax identification number
Key takeaway: You can obtain most types of tax identification numbers from the IRS. Social Security, however, has its own system, which you can use online or in person to find your SSN.