Here’s how to tell whether you need a tax ID number, how to get one, and the different types available.
What is a tax ID number?
‘Tax ID number’—also known as a TIN—is a term used by the IRS to signify any type of number you use to identify your business.
This number can be used to file your taxes. Also, you’ll need a tax ID number to open a business account or get a loan from a bank.
Do I need a tax ID number?
If you operate a sole proprietorship without any employees, or a single person LLC, you don’t need a tax ID number to file your taxes.
All other business structures, including any businesses with employees, need tax ID numbers to file their taxes.
And, as mentioned, you’ll need a tax ID number for business banking.
Why you should get a tax ID number now
Even if you’re don’t need a tax ID number to file your taxes now (e.g., you’re currently don’t have any employees), it’s in your best interest to get one as soon as you go into business. Your best bet is to apply for an EIN.
Why the rush? Getting an EIN is free, and doesn’t take much time or effort. It gives you the freedom to grow your business in the future. When you eventually decide it’s time to open a business bank account, hire employees, or restructure your business, you’re all set. Getting a tax ID number now will save you a step later on, when your hands are full helping your business grow.
Helpful reading: How to Hire Employees: 11 Tips for a Great Hiring Process
Need help setting up a TIN? Let BenchTax take care of the crucial stuff. A tax expert will handle the heavy lifting, so you can focus on your business. Learn More.
The three types of tax ID number
You may already have a tax ID number, and not even know it.
There are three types of ID number that can serve as your identification for tax purposes:
- a Social Security Number (SSN)
- an Individual Taxpayer Identification Number (ITIN)
- an Employer Identification Number (EIN)
Either your SSN or ITIN can serve as your tax ID number. SSNs and ITINs both have additional uses besides tracking your business.
However, the EIN is essential if you want to hire employees. Here’s how to choose which tax ID number is right for you.
SSN as tax ID number
An SSN is the most common kind of personal ID number in the United States. Only U.S. citizens, permanent residents, and non-immigrant working residents can get SSNs.
You need an SSN to:
- open a personal bank account
- be hired as an employee
- apply for a passport
- apply for a federal student loan
- apply for Medicare and social security benefits
- apply for public assistance, like unemployment insurance
- check your credit rating
How to get an SSN
The US Social Security Administration (SSA) provides SSNs. To get one, visit your local SSA office.
To apply for an SSN, at minimum you’ll need a U.S. birth certificate or a U.S. passport.
Plus, if you have one, you should also provide a U.S. driver’s license or another state-issued ID.
In the event you can’t get ahold of these documents, you may be able to provide the SSA with:
- a health insurance card
- a U.S. military ID card
- a school ID card
- an adoption decree
- a life insurance policy
- a marriage document (in the case of name changes)
You can provide a photocopy of any of these documents, but it needs to be verified by the issuing agency.
Still have some questions? The SSA has more info on SSN identification documents.
Using your SSN as a tax ID number
If you operate a sole proprietorship without employees, or a single-person LLC, your SSN serves as your tax ID number by default.
Already using your SSN to file business taxes? We recommend applying for an EIN. It will prepare you in advance in case you decide to hire employees or change your business structure.
ITIN as tax ID number
If you aren’t eligible for an SSN, the IRS may provide you with an ITIN instead.
Typically, you can get an ITIN if you’re:
- a non-resident alien
- a U.S. resident alien
- the dependent or spouse of a U.S. citizen or resident alien
- the dependent or spouse of a non-alien visa holder
You can only use an ITIN for tax reporting purposes. ITINs can’t be used to:
- gain authorization to work in the United States
- receive social security benefits
- qualify a dependent for an Earned Income Tax Credit
How to get an ITIN
To get an ITIN, you need to submit IRS Form W-7, Application for IRS Individual Taxpayer Identification Number.
On Form W-7, you must provide:
- current name and birth name (if different)
- place of birth
- ID documents such as your passport, driver’s license or state-issued ID (original form or certified copies)
- foreign status or immigration documents (original forms or certified copies)
You can submit Form W-7 in person or by mail. The IRS provides in-person locations and mailing addresses.
Using your ITIN as a tax ID number
While you can use your ITIN to file taxes for your sole proprietorship or LLC, we recommend getting an EIN. You don’t need to be a U.S. citizen to get an EIN, and it can benefit you down the line as your business expands.
EIN as tax ID number
While it’s called an ‘employer identification number,’ you don’t need to have employees already to get an EIN. In fact, you’re better off getting your EIN before you ever make a hire—it’s quick and easy to do, and once you decide to bring employees onboard, you’ll already have what you need to make it happen.
You need an EIN to file taxes if your business is:
- a sole proprietorship with employees
- an LLC with employees
- a partnership, with or without employees
- a corporation, with or without employees
Typically, you also need an EIN to:
- open a business bank account
- apply for a business loan
- obtain a business license or permit
- report and pay federal payroll taxes
How to get an EIN
Getting an EIN is quick and relatively straightforward. Check out our article on how to get an EIN.
Making changes to your Employer Identification Number (EIN)
Keep in mind that just because you have an EIN, don’t assume it’s written in stone—there are occasions when you may need to change your EIN. There are other cases where your EIN may remain the same, but you will still need to notify the IRS of changes to your business.
If you have an EIN, you need to get in touch with the IRS in the event that:
- you change your business name*
- you change your business address*
- your business changes ownership
- your business management team changes
- your business changes entity types*
* In these circumstances your EIN doesn’t change, but the IRS still needs to be notified
If you’re unsure whether you need to notify the IRS of a change, check out their page on EIN changes.
How to notify the IRS of a business name or address change
You can let the IRS know if your business name and/or address changes when you file your tax return. How you do this varies according to the types of tax forms you file.
How to notify the IRS of a changing business entity type
To change your business entity type, file IRS Form 8832. You use the same form if you are electing a different tax status (e.g., if you are an LLC, but you would like to file as a corporation).
How to change your EIN through the IRS
For all other significant business changes, you need to request that the IRS changes your EIN.
Ideally, this should be written on company letterhead. Your letter must include:
- your current EIN
- your current business name
- your current business address
- the name of the owner and principal officer
Where to send an EIN change letter
The address you send your EIN change letter to depends on which state your business is based in.
If your business is based in:
- the District of Columbia
- New Hampshire
- New Jersey
- New York
- North Carolina
- Rhode Island
- South Carolina
- West Virginia, or
Send your EIN change letter to:
Internal Revenue Service
Stop 343G, Cincinnati, Ohio 45999
Or you can fax it to 859-669-5748.
If your business is based in:
- New Mexico
- North Dakota
- South Dakota
- Wyoming, or
- any place outside of the United States
Send your EIN change letter to:
Internal Revenue Service
at M/S 6273, Ogden, Utah 84201
Or you can fax it to 801-620-7116.
State tax ID numbers
In order to file a state tax return for your business, you’ll need a state tax ID number.
When your register your business with your state’s Department of Revenue, you’ll also apply for an ID number. This process varies state by state, but it’s similar to applying for a federal EIN number.
While all businesses need a tax ID number, the specific type you’ll use depends on what kind of business you run, as well as your status as a U.S. citizen, resident, or alien.
In all cases, however, the easiest approach is to apply for an EIN. It will save you work down the line, and you can use it to open a business bank account or borrow money for your business. Our article on how to get an EIN number breaks the process down into simple terms for you.