Tax ID vs. EIN: What's the Difference and Which One You Need

A Tax ID and an EIN are not the same thing, though the terms are often used interchangeably

Tax ID is a broad umbrella term that covers several different identification numbers the IRS uses to track individuals and businesses. EIN — Employer Identification Number — is one specific type of tax ID, used only by businesses, partnerships, and certain other entities that have employees or file specific tax forms.

If you are a sole proprietor with no employees, you may use your Social Security Number as your tax ID instead of getting an EIN. If you run a business with employees, you need an EIN specifically. The confusion arises because people often say "tax ID" when they mean "EIN," but not every tax ID is an EIN.

Key Takeaways

Tax ID is the general category; EIN is a specific nine-digit number issued only to businesses and certain entities.
Sole proprietors without employees can use their Social Security Number as a tax ID instead of obtaining an EIN.
You must have an EIN if your business has employees, operates as a partnership or corporation, or files certain tax forms like Form 1065 or 1120.
An EIN is free to obtain from the IRS and takes about 15 minutes to request online.

When you need an EIN instead of just a tax ID

The IRS requires an EIN if your business structure is a partnership, S corporation, C corporation, LLC taxed as a corporation, or nonprofit. You also need an EIN if you have employees on payroll, even if you are a sole proprietor. The moment you hire your first employee, you must have an EIN before you can run payroll or file employment tax returns.

If you are a sole proprietor operating under your own name with no employees, you can file your business taxes using your Social Security Number. However, many sole proprietors get an EIN anyway for privacy reasons — it keeps your Social Security Number off business documents and vendor accounts.

Certain business activities also trigger the EIN requirement: if you operate a farm and file Schedule F, if you have a Keogh plan, if you file excise tax returns, or if you are a nonprofit organization. The IRS website has a full list of situations that require an EIN.

How to get an EIN and what documents you need

You can request an EIN online through the IRS website at no cost. The online application takes about 15 minutes and you receive your EIN immediately upon completion. You will need your Social Security Number, the legal name of your business, the business address, and the type of business structure (sole proprietor, LLC, corporation, etc.).

If you prefer not to apply online, you can mail Form SS-4 to the IRS, fax it, or call the IRS Business and Specialty Tax Line at 1-800-829-4933. Mailed applications typically take four weeks. Faxed applications take about one week. The phone line can issue an EIN on the spot, but wait times are often long.

You do not need to have a business license, a physical storefront, or any other documentation to request an EIN. The IRS only needs to verify that you exist and that you are requesting the number for a legitimate business purpose.

The difference between an EIN and other tax identification numbers

Beyond EIN, the IRS issues several other tax ID numbers for specific purposes. An ITIN — Individual Taxpayer Identification Number — is a nine-digit number issued to people who are not U.S. citizens or permanent residents but need to file taxes or open a bank account. An ITIN looks like an EIN but is used only by individuals.

A PTIN — Preparer Tax Identification Number — is issued to tax professionals and return preparers. A ATIN — Adoption Taxpayer Identification Number — is a temporary number for children in adoption proceedings who do not yet have a Social Security Number.

For most small business owners, the choice is between using your Social Security Number (if you have no employees) or getting an EIN (if you do have employees or operate as a business entity other than a sole proprietorship). The EIN is the most common business tax ID.

What happens if you operate without an EIN when you need one

If you have employees but do not have an EIN, you cannot legally run payroll. Employers must withhold income tax and Social Security tax from employee wages and remit those amounts to the IRS using an EIN. Without one, you cannot file the required employment tax forms (Form 941, Form 940, or Form 944).

The IRS can impose penalties for operating without an EIN when one is required. You may also face penalties for failing to file employment tax returns or for misclassifying workers. If you realize you need an EIN, you can request one immediately — there is no penalty for requesting it late, only for failing to use it once you have it.

Using your EIN on business documents and accounts

Once you have an EIN, you use it on all business tax returns, payroll documents, and business bank accounts. You provide your EIN to vendors, clients, and financial institutions instead of your Social Security Number. This protects your personal information and keeps your business finances separate from your personal finances in the eyes of the IRS.

If you are a sole proprietor using your Social Security Number as your tax ID, you still provide that number to the IRS on your Schedule C (business income and loss form). You do not need to switch to an EIN unless your business structure changes or you hire employees.

Frequently Asked Questions

Can I use my Social Security Number as a tax ID for my business?

Yes, if you are a sole proprietor with no employees. You report business income on Schedule C using your Social Security Number. Once you hire an employee, you must obtain an EIN.

How long does it take to get an EIN?

Online requests are processed immediately. Faxed requests take about one week. Mailed requests take about four weeks. Phone requests are processed on the spot, though wait times can be several hours.

Do I need an EIN if I have an LLC?

Not automatically. A single-member LLC taxed as a sole proprietorship can use the owner's Social Security Number. A multi-member LLC or an LLC taxed as a corporation must have an EIN.

Is there a fee to get an EIN?

No. The IRS issues EINs for free. Be cautious of third-party websites that charge fees to help you request an EIN — you can always request one directly from the IRS at no cost.

What if I lose my EIN or forget what it is?

You can look up your EIN by calling the IRS at 1-800-829-4933 or by checking past tax returns, payroll records, or business bank statements. The IRS can also issue a new EIN if yours is lost.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.