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EIN vs TIN - What Every Business Owner Should Understand

Understanding the significance of both EIN (Employer Identification Number) and TIN (Taxpayer Identification Number) holds paramount importance for individuals and businesses alike. EIN serves as a unique identifier for businesses, playing a pivotal role in tax-related matters, employee hiring, and establishing business accounts. It fosters financial transparency and ensures adherence to tax laws.

Conversely, TIN is a key concern for individuals, typically represented by their Social Security Number (SSN). TINs are indispensable for personal tax filings, accessing government benefits, and initiating banking relationships. Moreover, they serve as a safeguard against identity theft and fraudulent activities.

In essence, EIN and TIN are linchpins in the realms of taxation, finance, and legal compliance. They empower businesses and individuals to fulfill their obligations while safeguarding their financial well-being and security.

What is an EIN?

An EIN, or Employer Identification Number, is a special nine-digit ID given by the Internal Revenue Service (IRS) in the United States. It's like a code that helps businesses and other groups with taxes and finances. Businesses use EINs to tell the IRS who they are, when they pay taxes, hire employees, or open bank accounts.

In short, an EIN is an important number for businesses and organizations in the U.S. It helps them follow tax rules and do things like hiring and banking properly.

How is an EIN used?

EIN (Employee Identification Number) is used for various purposes and that are given as follows.

Tax Filing

Businesses using EIN number when they file federal tax returns.

Employee Hiring

When a business hires employees, they use an EIN to report taxes and wages to the IRS.

Opening Business Bank Accounts

Banks often require an EIN to open business accounts and secure loans.

Retirement Plans

EINs are used when setting up retirement plans for employees.

Legal Compliance

EINs are used to comply with IRS regulations and to establish the legitimacy of a business or organization.

Tax Filing

EINs may be needed for various contracts and agreements, especially in financial transactions.

In essence, EINs are essential for tax and financial matters, helping businesses and organizations operate legally and efficiently in the United States.

Obtaining an EIN

You need to follow the below steps to get your EIN successfully.

Check Eligibility
Choose How to Apply

You need to make sure that you and your firm qualify for EIN. Businesses, sole proprietors, partnerships, corporations, LLCs qualify for an EIN number.


Visit the IRS website and follow their instructions to apply online. You'll get your EIN right away.


Fill out Form SS-4 and send it by fax to your state's IRS office. You'll receive your EIN within a few days.


Complete Form SS-4 and send it by mail to the IRS. This method takes several weeks.

Fill out the SS-4 form: You need to provide details of your Business that should include name, type, address, and why you need EIN (E.g. For Business or hiring Employee)

Contact IRS

You can contact the IRS at 1-800-829-4933.

Keep Your EIN Safe

Once you have your EIN, store it safely. You'll use it for taxes and financial tasks related to your business.

Remember, it's free to get an EIN from the IRS directly. Be careful of companies charging fees to do it for you when you can easily do it yourself using these steps.

Benefits of Having EIN

For Businesses and organizations EIN is very important. If you get it then there will be a lot of advantages for your business. There will be a unique number that will assigned to your business, much like SSN for individuals.

This unique number is essential for tax purposes, enabling you to file taxes accurately, report income, and comply with IRS regulations.

Secondly, an EIN is necessary when hiring employees, as it allows you to handle payroll and employment tax responsibilities.

Thirdly, it simplifies financial transactions by facilitating the opening of business bank accounts and obtaining loans or lines of credit. Additionally, EINs are vital for establishing retirement plans for employees. Moreover, having an EIN helps prevent identity theft and keeps personal social security numbers safe. Overall, an EIN streamlines financial and tax-related aspects of running a business while ensuring legal compliance and financial security.


Understanding TIN

What is TIN?

A TIN, or Taxpayer Identification Number, is a distinct identifier used by individuals and organizations in the United States for tax purposes. For individuals in the U.S., this can often be their Social Security Number (SSN). Alternatively, if obtaining an SSN poses challenges, they can apply for an Individual Taxpayer Identification Number (ITIN) through the IRS, especially useful when setting up a merchant account.

TINs are crucial as they facilitate tasks such as filing tax documents, accessing government benefits, and opening bank accounts. They ensure that financial matters are handled correctly and safeguard personal information from theft. In essence, TINs serve as your tax ID to ensure compliance with the law and protect your security.

Different Types of TIN:


Social Security Number


Social Security number contains a 9-digit identification code which is assigned by the government of the United States to Citizens and eligible residents. People consider this number as a crucial number for various purposes.

The SSN serves as the primary tool for monitoring a person's lifelong income and employment history, which is crucial for deciding eligibility and computing benefits within Social Security programs, encompassing retirement, disability, and survivor benefits. Furthermore, this nine-digit identifier finds extensive application in financial and administrative realms, like initiating bank accounts, seeking loans, and meeting tax obligations. Safeguarding the secrecy of one's SSN is of utmost importance to thwart identity theft and fraudulent activities.

Individual Taxpayer Identification Number (ITIN):


Individual Taxpayer Identification number (ITIN) is a special nine-digit code and it is given by USA government to those who need to pay taxes, but they won’t get Social Security Number (SSN).

It assists them in adhering to tax regulations, reporting their income, and accessing tax advantages, all without needing an SSN. It's important to emphasize that possessing an ITIN doesn't grant permission to work legally in the U.S. or access Social Security benefits; its sole purpose is related to taxes.


Employee Identification Number:


An Employer Identification Number (EIN) is a unique identifier for businesses and organizations in the United States. It consists of nine digits and is issued by the Internal Revenue Service (IRS).

EINs serve primarily for tax-related purposes. They enable businesses to file tax returns accurately, report their income, and comply with IRS regulations. Additionally, EINs are essential for activities like hiring employees, opening business bank accounts, and establishing retirement plans for workers.

The significance of having an EIN lies in its role in ensuring tax compliance, legal operation, and financial transparency for businesses, while also safeguarding sensitive information and preventing identity theft.

Adoption Taxpayer Identification Number (ATIN):


An Adoption Taxpayer Identification Number (ATIN) is a unique nine-digit identification issued by the U.S. Internal Revenue Service (IRS). It's specifically meant for adoptive parents who find themselves in a situation where they can't get a Social Security Number (SSN) for their newly adopted child in time for tax filing.

ATINs serve a helpful purpose by allowing these adoptive parents to include the child as a dependent on their tax return and claim certain tax benefits related to adoption costs. This temporary ID number ensures that adoptive parents can follow tax rules while the official adoption process is still in progress and before they can obtain an SSN for the adopted child.


How to get TIN:

You can easily get the SSN (Social Security Number) or Individual Taxpayer Identification number (ITIN) by applying through IRS (Internet Revenue Service). US citizens are automatically issued a SSN after birth.

When is Tin Is Required?

A Taxpayer Identification Number (TIN) is required in different scenarios. There are a few situations that are given below.

Taxes: If you have to file taxes in the U.S., you'll need either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).

Bank Accounts: When you want to open a bank account, most banks will ask for your SSN. Borrowing Money: If you're applying for a loan, credit card, or mortgage, lenders usually want your SSN to check your credit history.

Government Benefits: If you're eligible for government benefits or assistance, they may ask for your TIN to make sure you qualify.

Starting a Business:If you're running a business, the type of TIN you need depends on your business structure, whether it's a sole proprietorship, partnership, or corporation. Investments: You might Require a TIN number for a few investments like stocks and bonds. Retirement Accounts: When you're setting up or managing retirement accounts, like IRAs or 401(k)s, you'll need a TIN.

Real Estate: Buying or selling property often involves sharing your TIN for tax and legal purposes.

Legal and Financial Stuff: TINs come up in various legal and financial situations, such as contracts and estate planning.

Difference between EIN and TIN

EIN (Employer Identification Number) and TIN (Taxpayer Identification Number) are two distinct identification numbers used in tax-related matters:

Entity Type EIN is specifically meant for businesses and organizations. It's used by employers, corporations, partnerships, LLCs, and various entities for tax reporting and financial transactions. TIN is a broader term that can refer to either an SSN (Social Security Number) or an ITIN (Individual Taxpayer Identification Number). SSN is for U.S. citizens and residents, while ITIN is for individuals, typically non-U.S. residents, who need a TIN for tax purposes.
Usage EIN is primarily used for business-related tax activities, such as filing tax returns, payroll, and business banking. SSN serves as a TIN for personal tax returns, government benefits, and financial transactions. ITIN is used when individuals require a TIN but do not qualify for an SSN, typically for tax reporting purposes.
Issuing authority EINs are issued by the Internal Revenue Service (IRS) for businesses and organizations in the U.S. SSNs are assigned by the Social Security Administration (SSA) to U.S. citizens and eligible residents, while ITINs are issued by the IRS to individuals with U.S. tax obligations who do not have an SSN.
Scope EINs are specific to U.S. entities and their tax obligations. TIN encompasses SSNs for U.S. individuals and ITINs for those who require a TIN for tax purposes but do not qualify for an SSN. ITINs do not relate to immigration status and are solely for tax use.


In conclusion, while both EIN and TIN are crucial for tax purposes, they cater to different entities and serve distinct roles. EIN is the lifeline of businesses, while TIN is the cornerstone of individual tax responsibilities. Understanding and using the differences appropriately is essential for financial and legal compliance. Merchantech empowers merchants with cutting-edge payment solutions and financial tools to streamline transactions and boost sales."

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