EIN vs ITIN: What's the Difference?
Two of the most commonly confused identification numbers for new business owners are the ITIN and the EIN. While they may sound similar and are both issued by the Internal Revenue Service, they serve very different roles in the U.S. tax system.
Are an ITIN and an EIN the same?
The short answer is no. They serve different purposes and apply to different levels of tax reporting. One is tied to an individual, while the other is tied to a business. Having one does not replace or eliminate the need for the other, and it is common for a business owner, especially a non U.S. resident, to need both.
Let’s break down the difference between these two numbers.
What is an EIN?
An Employer Identification Number, or EIN, also called a Federal Tax ID Number, is a unique nine digit number assigned by the IRS to identify a business for federal tax purposes. You can think of it as the Social Security number for a business.
An EIN is generally needed to open a U.S. business bank account, hire employees, file certain federal tax returns, and operate your business in the United States.
Technically, not every business is required to obtain an EIN. However, it is typically required for corporations, partnerships, LLCs with more than one member, and any business that hires employees.
What is an ITIN?
An Individual Taxpayer Identification Number, or ITIN, is a tax processing number issued by the IRS to individuals who have a U.S. tax filing or reporting requirement but are not eligible to obtain a Social Security number.
ITINs always begin with a “9” and are formatted similarly to a Social Security number. They are used strictly for federal tax reporting purposes.
ITINs are generally issued to certain non U.S. residents, resident aliens, and in some cases their spouses or dependents, who must file a U.S. tax return or be listed on one. ITINs are issued regardless of immigration status, as both resident and nonresident aliens may have a U.S. tax reporting obligation under the Internal Revenue Code.
Forming a Delaware corporation or LLC as a non resident is perfectly acceptable. However, if there is a U.S. tax filing requirement at the individual level, an ITIN is typically needed in order to complete that filing.
For example, if a company has U.S. source income and profits or losses that flow through to the member or shareholder, the individual owner may need to obtain an ITIN in order to satisfy personal U.S. tax reporting requirements. Whether an ITIN is required depends on the specific tax situation and structure of the business.
Which Do I Need?
Whether you need an EIN or an ITIN depends on who you are and what role you play in the U.S. tax system.
You generally need an EIN if:
- You are forming or operating a business entity in the United States
- Your business is an LLC, partnership, or corporation
- You plan to hire employees
- You need to open a U.S. business bank account
- Your business must file certain federal tax returns
You may need an ITIN if:
- You are an individual who must file a U.S. tax return
- You are not eligible for a Social Security number
- You earn U.S. source income or have other U.S. tax reporting obligations
Remember, an EIN identifies a business entity. An ITIN identifies you personally for tax reporting purposes. An ITIN does not represent a business and does not authorize employment in the United States.
EIN vs ITIN for Non U.S. Residents
You can, and often do, have both an EIN and an ITIN if you are a foreign individual operating a business in the United States. While they are both identification numbers issued by the IRS, they serve entirely different purposes.
For example, if you form a Delaware LLC as a non resident, the company will generally need an EIN to function. If that LLC generates income that must be reported on a personal U.S. tax return, you may need an ITIN to complete that filing.
Similarly, if your U.S. business hires employees, the company is generally required to obtain an EIN for payroll reporting purposes, while you would still use your ITIN, if applicable, for your personal tax filings.
Filing obligations can vary depending on the structure of the entity and the nature of the income, so it is important to review your specific situation with a qualified tax professional.
How to Apply
Both the EIN and the ITIN are issued by the IRS.
To apply for an EIN, you can generally apply online through the IRS website, by fax, or by mail using Form SS 4.
To obtain an ITIN, you must complete Form W 7 and submit it to the IRS along with required documentation verifying identity and foreign status. In most cases, the ITIN application is submitted with a federal tax return, unless an exception applies. The IRS also authorizes ITIN Acceptance Agents, both in the United States and internationally, to assist with the application process.
Final Thoughts
Although an EIN and an ITIN may sound similar, they serve very different roles in the U.S. tax system.
An EIN identifies your business.
An ITIN identifies you as an individual for tax reporting purposes.
Understanding the difference can help you plan properly when forming and operating a U.S. company.
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*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.
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There are 19 comments left for EIN vs ITIN: What's the Difference?
ALI said: Sunday, June 14, 2020I am an alien resident in the US, i am eligible stay in US but still don't have SSN, i made a personal company and have now EIN, can i use my company to work as subcontractor in the field of transportation and construction or other fields or not.
HBS Staff replied: Monday, June 15, 2020With a Delaware company, you can operate legal business activities anywhere in the world, including contracting with other parties. However, we cannot advise on other factors, such as your immigration status, that may affect your eligibility to engage in that particular relationship.
dennis shostle said: Friday, May 1, 2020I just purchased a cafe I geeked out for a EIN but don’t know if I needed a TIN instead. Could you please let me know what I need
HBS Staff replied: Monday, May 4, 2020A TIN (Tax Identification Number) is just another term for EIN. An ITIN (Individual Taxpayer Identification Number) is typically used by individuals who do not have a U.S. social security number. Please let us know if you have additional questions.
Nery Garcia said: Monday, June 10, 2019I create an LLC with you, and you helped me get my EIN, I went to different branchs of diffrent banks in the Us trying to open a business bank account but they told me I cannot open a business bank account because I am non us resident. wells fargo asked me for the ITIN, my question is: I am already paying taxes to delaware and the IRS with my EIN, if I get the ITIN, do I have to pay another tax for that? thanks for your answer
HBS Staff replied: Wednesday, June 12, 2019Nery, for this question we recommend you speak with a tax professional. Unfortunately, we do not provide service for ITIN and are unable to answer your question.
Darlene Ellen Smith said: Friday, April 26, 2019I applied for an EIN number and I received it online yesterday and printed it out however I forgot to apply for it as LLC. What can I do to correct it so it will be under LLC.
HBS Staff replied: Monday, April 29, 2019
[Update: Please contact the IRS directly if you need to make a change to the document you filed with them already.]
Darlene, typically the first step of the process is to form the LLC then build off it from there. If you have obtained the EIN number already, we can help to form the LLC, we would just need this completed www.delawareinc.com/order, if the name is available to be formed we will file your new LLC right away!
AMAZOKAD said: Saturday, March 2, 2019
Hello I am not an American resident. I created an offshore LLC company. I am the owner and I have my EIN. I want to open a bank account in the United States without moving. if I understand correctly the bank will ask me next to my EIN the ITIN. My question is this: since I have the EIN it means that the IRS has already created an ITIN for me just enough to ask. Or do I have to fill out another form specifically for the ITIN? Cdt OKAD MARKET
HBS Staff replied: Monday, March 4, 2019The ITIN is not a number that is automatically generated when the EIN number is obtained. A number of our clients have used Seaford Management LLC to obtain their ITIN. Seaford Management LLC is a Certifying Acceptance Agent with the IRS, and they can file your application to obtain an ITIN number. If you have any questions about the ITIN, or would like to get an ITIN, you can email Seaford Management LLC or call them at (302) 990-9003.