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Tax ID vs. EIN: What’s the Difference?

By IncNow | Published June 15, 2020

Incorporating your company is an exciting process, but the work isn’t done after you form an LLC or Corporation. After that, there are several more steps to take, like getting a tax ID number for your business. The process of getting a tax ID isn’t complicated, but there is often some confusion about what, exactly, a tax ID is and how it differs from an EIN. Here’s what you need to know.

What Is a Tax ID?

A tax identification number (tax ID) is a nine-digit number issued for your business by the IRS. Think of a tax ID as a social security number for your business. Your tax ID number is often used for identification, and the IRS uses this number to administer tax laws.

What Is an EIN?

EIN stands for employer identification number. While there can be some confusion about the difference between a tax ID number and an EIN, they’re actually different names used to describe the same thing.

Tax ID vs. EIN

Again, a tax ID is an EIN. The terms are often used interchangeably, although the different terms can cause confusion.

What Is a Tax ID or EIN Used For?

An EIN is required to withhold taxes from your employees and to open a business bank account. You will also be asked to supply your tax ID number when you fill out any application that requires your business to validate its authenticity.

How Do I Apply for an EIN?

When you incorporate your business, a registered agent like IncNow can often secure an EIN for your Delaware LLC after the Certificate of Formation is approved by the Secretary of State.

To obtain the number, you can fill out a simple online form at IRS.gov/EIN or ask an incorporation service to assist you. You will need to have a signed and completed IRS Form SS4. Should you want help getting the EIN, you can name a third party designee on the IRS Form SS4.

Should you have a social security number, the IRS will often provide the EIN right away online to you or the third party designee. Without a SSN, the IRS will ask that a Form SS4 be faxed in to their office. Faxing in the information is a slower process. When faxed in, the EIN usually takes 3-5 weeks for the IRS to assign. In around that same amount of time, two to five weeks, you will also receive a hard copy of your tax ID from the IRS in the mail.

How Is a Tax ID Number and EIN Different from an ITIN?

An individual taxpayer identification number (ITIN) is a tax number given to some non-U.S. residents and resident aliens, as well as their spouses and dependents, who are not able to obtain a social security number. If you plan to incorporate in Delaware and you do not have a social security number, you should not need to obtain an ITIN. The Form SS4 does not require an ITIN to obtain an EIN.

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When deciding where to form your company, consider that Delaware has advantages over your home state that may benefit you. Go