EIN vs ITIN: Which Tax ID Do You Need for Your Business?

Tax & Compliance

4 min read

EIN vs ITIN: Which Tax ID Do You Need?

Understanding the difference between EIN and ITIN for your business tax identification needs. Complete application guide included.

Robert Thompson, CPA

March 8, 2025

Quick Answer:

Most businesses need an EIN (Employer Identification Number). ITINs are for individuals who need to file taxes but don't qualify for a Social Security Number. If you're forming an LLC or corporation, you need an EIN.

EIN

Employer Identification Number

For Businesses

LLCs and Corporations
Employers with staff
Business bank accounts

ITIN

Individual Taxpayer Identification Number

For Individuals

Non-resident aliens
Dependents of taxpayers
Personal tax filing

What is an EIN?

An Employer Identification Number (EIN), also called a Federal Tax Identification Number, is a unique nine-digit number assigned by the IRS to identify a business entity for tax purposes. The format is XX-XXXXXXX (e.g., 12-3456789).

Who Needs an EIN?

All LLCs and Corporations
Required regardless of number of employees
Businesses with employees
Needed for payroll tax reporting
Sole proprietors who want business banking
Most banks require EIN for business accounts
Partnerships
Required for all business partnerships
Non-profit organizations
Required for tax-exempt status

What is an ITIN?

An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the IRS for individuals who need to file tax returns but don't qualify for a Social Security Number. The format is 9XX-XX-XXXX (e.g., 912-34-5678).

Who Needs an ITIN?

Non-resident aliens with US tax obligations
Foreign individuals earning US income
Resident aliens not eligible for SSN
Those who don't qualify for Social Security Numbers
Dependents or spouses of taxpayers
For tax return filing purposes
Students and researchers
Foreign students or scholars with US tax obligations

Important:

ITINs are for tax filing purposes only. They don't authorize work in the US, provide eligibility for Social Security benefits, or qualify you for the Earned Income Tax Credit.

Key Differences Comparison

Feature	EIN	ITIN
Purpose	Business tax identification	Individual tax identification
Format	XX-XXXXXXX	9XX-XX-XXXX
Used For	Business tax returns, payroll, banking	Personal tax returns only
Application Cost	Free from IRS	Free from IRS
Processing Time	Immediate (online) or 2-3 weeks	6-10 weeks
Expiration	Never expires	Expires if not used
Work Authorization	Not applicable	Does not authorize

How to Apply for an EIN

Good News:

EIN applications are free and can be completed online instantly during business hours.

Application Methods

Online

Immediate (business hours)

Recommended method

Fax

4 business days

Form SS-4 required

Mail

2-3 weeks

Slowest method

Required Information for EIN Application

Responsible party information
Name and SSN/ITIN of the person controlling the entity
Business name and address
Legal name and principal business location
Business structure type
LLC, Corporation, Partnership, etc.
Reason for applying
Started new business, hired employees, etc.
Expected number of employees
Including yourself if you'll take a salary

How to Apply for an ITIN

Note:

ITIN applications require original documents or certified copies and take longer to process.

Application Process

1. Complete Form W-7
Application for IRS Individual Taxpayer Identification Number
2. Attach tax return
Must submit with a federal tax return (with exceptions)
3. Provide identity documents
Original documents or certified copies from issuing agency
4. Submit application
Mail to IRS or visit Certified Acceptance Agent

Acceptable Documentation

You must provide documents that establish both identity and foreign status:

Passport (alone is sufficient)
National identification card + foreign driver's license
US driver's license + foreign birth certificate
Other combinations as specified by IRS

Common Scenarios & Recommendations

Scenario 1: Starting an LLC

Recommendation: Get an EIN

All LLCs should obtain an EIN, even single-member LLCs. You'll need it for business banking, tax elections, and potential future employees. The application is free and instant online.

Scenario 2: Foreign Individual with US Business

Recommendation: Get both ITIN and EIN

If you're a foreign individual starting a US business, you'll likely need an ITIN for personal tax filing and an EIN for your business entity. Apply for the ITIN first, then use it when applying for the EIN.

Scenario 3: Sole Proprietor (US Citizen/Resident)

Recommendation: EIN optional but recommended

US citizens and residents can use their SSN for sole proprietorship taxes, but getting an EIN provides privacy protection and is required for business bank accounts.

Scenario 4: Foreign Individual, No US Business

Recommendation: ITIN only

If you're a foreign individual with US tax obligations but no business entity, you only need an ITIN for personal tax filing purposes.

Important Considerations

ITIN Expiration:

ITINs that haven't been used on a tax return for three consecutive years will expire. ITINs with middle digits 70-88, 90-92, 94-99 are also expiring and need renewal.

Professional Help:

Consider consulting a tax professional if you have complex business structures, multiple entities, or questions about tax elections. Professional services can help ensure your applications are completed correctly and processed efficiently.

EIN Processing:

While EIN applications can be completed directly with the IRS, professional services can expedite the process and ensure accuracy, especially for complex business structures.

Next Steps After Getting Your Tax ID

With Your EIN:

Open a business bank account
Keep business and personal finances separate
Set up business credit
Build credit history for your business entity
File tax elections if needed
Such as S-Corp election for LLCs
Register for state taxes
Sales tax, employer taxes, etc.

With Your ITIN:

File your tax return
Use ITIN where SSN would normally be required
Keep ITIN active
Use on tax return every three years to prevent expiration
Consider tax planning
Consult with tax professional for optimization strategies

Need Help Getting Your EIN?

We can help you obtain your EIN as part of our LLC formation service. Get your business set up properly from the start.

Start Your Business with EIN View All Services

Operating Agreement Requirements by State

After getting your EIN, consider professional help with your LLC operating agreement.

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