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 (IRS), they play 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’s common for a business owner to need both.
Now, let’s try to discern the difference between these two numbers.
What is an EIN?
An Employer Identification Number (EIN), also called a Federal Tax ID Number, is a unique nine-digit number assigned by the IRS to identify a business for tax purposes. Think of this number as the social security number for a business. The EIN is typically needed to do banking, hire employees, file taxes, and generally operate your business in the United States.
Technically, not every business needs an EIN, but it’s typically required for corporations, partnerships, LLCs with multiple members, and any business that hires employees. Even sole proprietors may need one in certain situations.
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What is an ITIN?
The individual taxpayer identification number (ITIN) is a tax number only available to certain non-U.S. residents, resident aliens, their spouses, and dependents who are not able to obtain a social security number (SSN). ITINs always start with a "9" and are typically formatted like a Social Security number: 9xx-xx-xxxx. The ITIN is used for federal tax reporting, allowing individuals to file U.S. tax returns and pay taxes.
Forming a Delaware corporation or LLC as a non-resident is perfectly acceptable when the foreign individual or group applies for an ITIN. If there is a tax filing requirement with the IRS, an ITIN is needed. For example, if a company has U.S. source income and profits or losses that flow through to the member or shareholder, owners typically need to obtain an ITIN in order to complete a tax filing with the IRS.
ITINs are issued regardless of immigration status because both resident and non-resident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.
Which Do I Need?
Whether you need an EIN or an ITIN depends on, well, who you are and what you’re doing in the U.S. tax system. Here’s a quick breakdown that will help you determine which will apply to you:
You need an EIN if:
- You are forming or operating a business 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
- You must file business tax returns
You need an ITIN if:
- You are an individual who must file U.S. taxes
- You are not eligible for a Social Security number (SSN)
- You earn U.S.-source income, own a U.S. business, or must file a U.S. tax return
Just remember that an EIN identifies a business entity, not an individual, and is issued by the IRS. An ITIN identifies you personally for tax purposes and does not represent a business.
EIN vs. ITIN for Non-U.S. Residents
You can (and often must) have both an EIN and an ITIN if you are a foreign individual operating a business in the United States. While they are both tax identification numbers, they serve entirely different purposes. You can think of the ITIN as your personal ID and the EIN as your business’s ID.
For example, if you decide to form a Delaware LLC as a non-resident, the company will need an EIN to function. When the LLC starts to turn a profit, you’ll need to report that income on a personal U.S. tax return, for which you will need an ITIN. Similarly, if you decide to hire employees for your U.S. business, you are required to get an EIN for payroll purposes, while still using your ITIN for your own personal filings.
How to Apply
Both the EIN and the ITIN are issued by the IRS.
For an EIN, you can apply directly through the IRS website, via fax, or through the mail. When applying online, the process is relatively quick. After you complete the online EIN application, you’ll receive your EIN immediately after submitting. All you’ll need is your business name, the Responsible Party’s name and SSN/ITIN, and your business address. You can also apply for an EIN by submitting Form SS-4 by fax. This process usually takes several days, but it is useful if you can’t use the online system. You can also mail Form SS-4 to the IRS, but this process will take several weeks.
You can obtain an ITIN Number by completing Form W-7 and mailing it to the IRS. Alternatively, you can contact one of the ITIN acceptance agents listed by the IRS for assistance. There are agents available within the U.S. as well as in many countries internationally.
EIN & ITIN FAQs
What is a 'responsible party', as required on the SS-4 form?
The responsible party must be an individual. For a Corporation, the responsible party is an officer of the company, and for an LLC, the responsible party is an owner or member of the company.
As my registered agent, is Harvard Business Services’ address the address of my company?
No, the address of your company is not Harvard Business Services’ address. The IRS requires a physical business address for your company, even if it is based outside of Delaware and the U.S. Also, be prepared to provide the IRS with a brief description of the nature of your business. You have up to 50 characters including spaces for this field.
Can I use my EIN instead of an ITIN to file personal taxes?
No. An EIN is strictly for business entities. If you have a personal tax filing requirement, such as reporting your share of an LLC's profits, you must use your ITIN or SSN. Using an EIN on a personal tax form will result in a rejected return.
Are EINs and ITINs public?
The IRS does not maintain a public database for either number. However, EINs often become public through business activities. Non-profits and publicly traded companies will often make their EINs public through certain filings and tax returns. On the other hand, your ITIN should remain strictly confidential. There is no public registry for ITINs, and the number should only be known to you and the IRS.
Get answers for all your business needs
Not sure what’s right for your company? Speak directly with our specialists and get clarity before you make your next move.
Talk to an expert*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?
Nirav Patel said: Thursday, October 15, 2020I am an Indian citizen and my partner is a US citizen. I want to open a partnership company [LLC] in Delaware, USA. Once our company will start in the USA, at that time I have to file my personal tax return in the USA and as I am an Indian citizen, so I have to submit that in India later on. So for that my questions are: 1. How to file tax in the USA without social security number? 2. Do I file K1 with ITIN? 3. What documents of mine are required to get ITIN number? List of my documents for Indian Citizen 4. Is personal bank account of mine mandatory in USA? 5. Is a USA visa required? [If yes, type of Visa] 6. Do I have to visit USA for that? 7. How much time whole process will take? waiting for your reply
HBS Staff replied: Friday, October 16, 2020Nirav, thank you for reaching out. Unfortunately, many of your questions we are not able to answer, as we cannot provide tax advice or provide support for setting up your bank account. What we can tell you is that there is no requirement to have a bank account in the US. You might want to contact a bank to discuss what you'll use the account for to make sure it's the right choice. As far as the ITIN, the information you'll need to provide can be found on IRS form W-7: https://www.irs.gov/pub/irs-pdf/fw7.pdf
Tahir said: Thursday, October 15, 2020For a Non US or never visited US person, please guide me: I want to start an online selling business from my own country, in this case either LLC or Corporation, which is best for business benefits. I heard Mercury bank and Azlo for online banking, which one you recommend as more reliable. Please assist if I can take your service for both these assignments so?
HBS Staff replied: Thursday, October 15, 2020This article will help you compare LLCs and Corporations: https://www.delawareinc.com/corporation/corporation-vs-llc/
As we mentioned, we cannot advise on which is a better option for you, because it depends on your specific objectives and plans for the business. For example, LLCs are often a good choice for simple and flexible management. Corporations are typically preferred by clients who intend to sell equity ownership in their company. We highly recommend that you speak with an attorney if you are unsure which to choose. We are happy to help you create the company once you know which entity type you want.
We do not work directly with the banking platforms and cannot advise on which to choose. It would be best to contact both of them to understand their benefits and requirements for creating an account.
Tahir said: Sunday, October 11, 2020I am a non US resident, nor I have visited US in past. I want to create a company in US without visiting US, to start an online business. Please tell me whether LLC is the best option or the Incorporation Inc. company? Moreover, I don't have any physical address, nor anyone in US whose physical address I can provide in forming a company or business bank account. How I can create my company in such conditions. Please assist in this regard
HBS Staff replied: Wednesday, October 14, 2020As a non-resident, you can still create either an LLC or corporation. The choice depends on your objectives for the business so unfortunately we cannot tell you which is the right choice for you. Most US banks will require you to visit in person in order to open an account. Some of our international clients have had success with Merucy Bank, so you might want to check with them.
Leon Rashed said: Wednesday, July 15, 2020Is the vendor ID the same as the IRS tax ID for a sole proprietorship. Reply
HBS Staff replied: Thursday, July 16, 2020This would depend on the form that you are completing. We can't be sure what Vendor ID is referring to. Sorry we can't be of more assistance.
Mohamad Farchoukh said: Thursday, July 9, 2020Hello, I created a delaware LLC for my online business, and i'm trying to get a payoneer bank card for my company. They are asking me for an ITIN. Since i havent paid any taxes yet, and i'm not a US citizen or living in the US, can I get one? if yes, how?
HBS Staff replied: Thursday, July 9, 2020You can obtain an ITIN Number by completing Form W-7 and mailing it to the IRS. Alternatively, you can contact one of the ITIN acceptance agents (https://www.irs.gov/individuals/international-taxpayers/acceptance-agent-program) listed by the IRS for assistance. There are agents available within the U.S. as well many countries internationally. Additional info here.