When you have a business, you need a way to identify it. That way, you can submit payroll forms or tax returns, open a business bank account, establish a retirement plan, and more. So, how do you identify your business? You need a taxpayer identification number (TIN). Read on to learn what is a taxpayer identification number and types of TINs.
What is a taxpayer identification number?
A federal tax ID number is an identifying number the Social Security Administration (SSA) or IRS assigns to individuals and businesses. TINs are generally nine-digit numbers that help identify an individual or company.
Social Security numbers are the most common type of taxpayer identification number. SSNs are also the only TIN that the SSA issues. But, the IRS also assigns TINs. And if you have a business, chances are you may need an IRS-issued TIN at one point or another.
Most businesses also need a state tax ID number for reporting state taxes (e.g., state income tax, employment tax, etc.). Your state issues state tax ID.
You must include your TIN on your small business tax returns, statements, and other tax-related documents.
Types of taxpayer identification numbers
There are several types of taxpayer identification numbers available for individuals, businesses, and tax preparers.
Take a look at the following types of TINs:
- Social Security Number (SSN)
- Employer Identification Number (EIN)
- Individual Taxpayer Identification Number (ITIN)
- Taxpayer Identification Number for Pending U.S. Adoptions (ATIN)
- Preparer Taxpayer Identification Number (PTIN)
- State taxpayer identification number
| Taxpayer Identification Number | Abbreviation | Who Needs It? | Application |
|---|---|---|---|
| Social Security Number | SSN | Individuals, sole proprietors, and single-member LLCs | Form SS-5 |
| Employer Identification Number | EIN | Employers, corporations, partnerships, and multi-member LLCs | Form SS-4 or online |
| Individual Taxpayer Identification Number | ITIN | Nonresident and resident aliens, their spouses, and dependents who cannot get an SSN | Form W-7 |
| Taxpayer Identification Number for Pending U.S. Adoptions | ATIN | Individuals in the process of legally adopting a U.S. citizen or resident child, if the child does not have an SSN | Form W-7A |
| Preparer Taxpayer Identification Number | PTIN | Individuals who prepare or assist in preparing federal tax returns | Form W-12 |
| State Taxpayer Identification Number | State tax ID, state EIN, state employer ID | Businesses that must pay state taxes | State registration |
As a business owner, you generally use either an SSN or EIN on your business documents. The TIN you must use depends on your business structure and whether you have employees.
Learn about each of the taxpayer identification numbers you might come across, when you would need to use them, and how to obtain them.
1. Social Security number
Format: XXX-XX-XXXX
A Social Security number is a nine-digit number the Social Security Administration administers to all U.S. citizens for identification.
You can use your Social Security number on business tax documents if:
- You don’t have employees
- Your business is structured as a sole proprietorship or single-member LLC
- Your business is structured as a single-member LLC
Individuals and businesses use Social Security numbers on tax return forms and bank account applications.
Application
If you didn’t receive one at birth, you must file Form SS-5, Application for a Social Security Card, to get a Social Security number. If you need a replacement card or must correct information on your current record, you can also file Form SS-5.
2. Employer Identification Number
Format: XX-XXXXXXX
An Employer Identification Number, or Federal Employer Identification Number (FEIN), is a set of numbers the IRS issues to identify a business.
You must apply for and obtain an EIN if:
- You have employees
- Your business is structured as a corporation, partnership, or multi-member LLC
Record your business’s EIN on employment tax documents like Forms W-2 and 941.
Application
You can apply for an EIN online or by mailing or faxing Form SS-4, Application for Employer Identification Number. There is a wait if you apply by mail or fax. If you apply online, you will receive your EIN immediately.
3. Individual Taxpayer Identification Number
Format: XXX-XX-XXXX
Certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security number use ITINs. An ITIN is a nine-digit number formatted like an SSN.
ITINs do not authorize individuals to work in the United States. It is not a substitute for a Social Security number.
Application
You can apply for an ITIN by filing Form W-7, Application for IRS Individual Taxpayer Identification Number.
4. Adoption Taxpayer Identification Number
Taxpayers who are adopting a child domestically can use an ATIN if they do not have and/or cannot obtain the child’s SSN. An ATIN is a nine-digit number the IRS issues.
You can use the ATIN to claim the child as your dependent on personal income tax returns while the final domestic adoption is pending.
Application
You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending Adoptions.
5. Preparer Taxpayer Identification Number
Paid tax preparers must apply for and receive a PTIN to include on returns. If you prepare or assist in preparing federal tax returns for compensation, you need a PTIN. There is a fee to renew the PTIN.
Unlike other federal TINs, the PTIN is an eight-digit number preceded by the letter P.
Application
You can apply for a PTIN online or by filing Form W-12, IRS Paid Preparer Tax Identification Number Application.
6. State taxpayer identification number
Businesses that file taxes and hire employees generally must register with their state for a state tax identification number.
The state taxpayer identification number is a state-specific version of a federal EIN. Your state taxpayer identification number may also be called a state:
- EIN
- Employer ID
- Tax registration
Application
The application process varies by state, but it’s similar to applying for a federal EIN. Generally, you can register online using your state website (e.g., state department of revenue, department of labor, etc.).
If you’re looking for a simple way to run payroll, try Patriot Software. Our online payroll software uses a three-step payroll process so you can easily withhold deductions and pay employees. Get your free trial today!
This article has been updated from its original publication date of February 27, 2013.
This is not intended as legal advice; for more information, please click here.