“What Is the difference between tax ID and EIN?
” That is a common question our organization receives from a wide variety of clients. An EIN is an employer identification number. The number gets issued by the IRS. It functions as a specific type of tax ID that many businesses use. Thus, “tax ID” refers to different types of IRS identification numbers. EIN is the most common form of tax ID other than a Social Security Number. Please continue reading to learn more about tax ID and EIN numbers. If you have any questions, please pick up the phone and call our organization.
What Are Tax IDs?
The term “tax ID” refers to the official IRS Tax Identification Number (TIN). This is a nine digit number that the IRS uses to assign to US businesses. Each company doing business in the country needs to have a tax ID. There are many businesses in the United States that have the same name. That’s why the Internal Revenue Service uses tax IDs. Each ID functions as a unique identifier for taxation (and some other) purposes.
Sure, the federal government uses tax IDs. But even local and state governments also use them. Creditors, banks , and vendors also use tax identification numbers. This way, they can recognize the identity of every business. In most cases, you need a tax ID to open a new business bank account. The ID is also for securing business licenses and hiring employees. Most companies also use a tax ID to file payroll taxes.
Who Must Use a Tax ID?
There are many cases where people or organizations need to use tax ID numbers. A business uses a tax ID when it has employees or if it files a tax return. Say that you withhold income tax when making a payment. The government will need your tax ID. Do you conduct business through an LLC
, or limited partnership
? If so, you also need to have a tax ID. You should never use your SSN (social security number) for business purposes. That is why the government created the EIN and other tax identification numbers.
What Are Employer Identification Numbers?
The EIN (Employer Identification Number) is a non digit number issued by the IRS. The purpose of an EIN is for the IRS to have the ability to recognize each company. Through an EIN, the IRS can access taxpayers that will file business tax returns. Keep in mind that you do not have to have employees to secure an EIN. Of course, you will need an EIN if you do pay any workers. But here are some other reasons why people register an EIN. They might operate a partnership firm or corporation. Or, a person withholds taxes and needs the number for IRS processing reasons.
EIN vs. TIN (Tax ID)
IRS officials use TIN to recognize both businesses and individuals alike. This way, the IRS can ensure complete tax compliance. That is why everyone has to reference the TIN in their tax returns. Plus, a TIN should also go inside other documents filed through the IRS. The EIN refers to a specific type of TIN. The IRS can use an EIN to track both individuals and business entities.
When Should I Apply To Receive a Tax ID?
Two types of business can apply for a tax identification number at any time. They are general partnerships and sole proprietorships
. LLCs and corporations become more restricted by the IRS. They can only apply to get a tax ID after their formation document gets approved. (This refers to the Articles of Organization or Articles of Incorporation.) The IRS does not approve business formation documents. Instead, a stage agency has to process each application. Say that the state approves your formation submission. You can then apply to receive a tax ID.
What Information Should I Provide To Secure a Tax ID?
Here is the information you'll need to provide when filling out a tax ID application. First, you will need to list your business address. Then, you will have to provide the name of the principal officer. (Or, the manager/owner.) Next, you must describe the activities that your business takes part in. If you have an LLC
, write the number of members within the LLC. Also, write the date your business began operations. The IRS will also need to know how many employees you plan to hire next year. Did you use an EIN in the past? If so, the IRS will also need to know that information. Your IRS application should also include your business phone number. How Long Does It Take To Get an LLC? Is the EIN a Type of Tax ID?
Yes. The EIN is one of the main types of numbers that the IRS uses for tax identification. An SSN (social security number) is one of the other numbers. The third common type of number is the ITIN. It stands for “individual tax identification number.”
When Should I Change My Tax ID?
Each tax ID exists for the entire lifetime that a business stays open. But there are some situations where a business needs to change a tax ID number. Say that your business changes its location or business name. That means you will need a new ID number. This also applies if a corporation or LLC files for bankruptcy.
Any process of S-corporation election also leads to the need for a new tax ID number. Now, say that your official business entity type changes. This also means you must file for a new tax identification number. Say your corporation gets a new charter from a secretary of state. That is another situation where it’s time to replace a tax ID number.
How Many Types of Tax Identification Numbers Exist?
The IRS uses five unique types of tax ID numbers. You now know all about the first, which is the EIN (Employer Identification Number). The second tax identification number is the SSN. It stands for Social Security Number. An ITIN is the third-most popular form of taxpayer identification number. “ITIN” stands for Individual Taxpayer Identification Number.
There is also an ATIN: Adoption Taxpayer Identification Number. The fifth, final tax ID number is the PTIN: Preparer Taxpayer Identification Number. Please call our organization if you have questions about any of these ID numbers. Our experts can help you figure out which TIN your business needs. Then, we can file all IRS tax ID paperwork on your behalf.
How Long Does an EIN Number Take?
All EIN applications must get sent to the IRS. The IRS’ processing time will vary based on a few different factors. Do you want to receive your EIN on the same day that you send the IRS an application? If so, you must apply for an EIN online through the IRS website. Say that you decide to fax the IRS your application. You will have to wait about four days. Mailing the IRS an EIN application will increase the waiting time to at least four weeks. Keep in mind that our organization can help you receive an EIN number today. Please call us right now to get started.
Should I Get an EIN or Tax ID?
The answer to this question depends on the type of taxpayer that you are. Your specific tax status will lead to either type of tax identification number. Keep in mind that an EIN is only for businesses to use. Most business owners have EIN numbers. That’s because they cannot open business bank accounts without this crucial number.
Is an EIN the Same as a Sales Tax ID?
No. An EIN always gets issued only at the federal level by the IRS. Meanwhile, a sales tax ID can get issued at the state or federal level. It depends on your unique business situation. Say that you're a business owner selling products in a state charging sales tax. That means the IRS will enforce that your business has a sales tax ID number. What services do we provide? Do You Need to Get a Tax ID or EIN? Contact Us Now
team’s standing by to register your business with the IRS. All you've got to do is pick up the phone and give us a call. Within minutes, our experts can assess your unique government registration needs. Then, we can file your paperwork with the IRS ASAP. In some cases, our organization can provide same-day delivery for tax ID numbers. We look forward to helping your business adhere to all IRS rules and regulations.
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