When opening bank accounts, submitting tax return forms, or processing a payroll you’ll be required to fill out a personal or business taxpayer identification number (TIN). Since several numbers can serve the purpose of taxpayer identification, we’ll highlight their differences so that you know exactly what you need to fill in.
TINS are issued by the IRS or the Social Security Administration (SSA). The most common taxpayer ID number is the Social Security Number (SSN). But there are more, including the Individual Tax ID Number (ITIN), that allow non-residents in the US to send an application for ITIN loans.
What Is A Taxpayer Identification Number (TIN)
This is a general term describing various types of numbers that the IRS uses to administer taxes and identification.
The IRS essentially uses TINS to trace payments of federal taxes to businesses and individuals.
To run a business, you’ll require a taxpayer ID number to open bank accounts, file your small business tax returns, or generate payroll for your employees.
Types Of Taxpayer Identification Number
We’ll focus on the three main types of taxpayer ID numbers as they’re the most relevant to your small business operations.
- Social Security Number (SSN)
- Individual Taxpayer ID Number (ITIN)
- Employer ID Number (EIN).
Other less common taxpayer ID numbers are:
- The ATIN for pending US adoptions
- Preparer Taxpayer Identification Number (PTIN)
Social Security Number (SSN)
The Social Security Administration (SSA) issues a Social Security Number to all US citizens for identification purposes. Individuals, sole-owned businesses, and single-member LLCs need SSNs for their business operations.
The 9-digit number is usually issued at birth, but you can apply for it by filing Form SS-5 if you weren’t issued with one.
Where you might require to use it
- On tax return forms.
- To apply for a bank account.
- To identify those eligible for work in the US.
- To apply for social security benefits, medicare, a passport, federal student loans.
Individual Taxpayer ID Number (ITIN)
Individuals ineligible for an SSN or Employer ID Number can legally run a business, pay taxes, and open bank accounts by applying for an ITIN. They can even apply for ITIN loans to boost their small businesses once they have an ITIN.
Who needs an ITIN
- Resident and non-resident US aliens, and their spouses and dependents, who are ineligible for an SSN
ITINs are for tax purposes and cannot be used for identification. They also can’t make you eligible for Social Security benefits.
How to apply for an ITIN
- Fill out the IRS Application for Individual Taxpayer Identification Number (IRS Form W-7).
- Provide documentation that shows your foreign status and the proof of identity by way of passport/driver’s license.
- Fill out a federal tax return with the application
- Submit your request to the IRS by mail or by handing it to an IRS officer.
The IRS will furnish you with your ITIN number within 6 weeks if you’re successful. Once you have your ITIN, you can apply for an ITIN loan to grow your business.
Employer ID Numbers (EIN)
To identify business the IRS issues an Employer ID Number (EIN), also known as a Federal Identification Number (FEIN). Every business that has employees must obtain an EIN. Nonetheless, suppose your business is a partnership, corporation, or multi-member LLC. In that case, you require an EIN whether you have employees or not.
Where you’ll need an EIN as a business
- Paying your business income taxes and federal payroll taxes
- To apply for a business bank account
- To apply for a business loan
How to apply for Employer ID Number (EIN)
- Applying for EIN online. The EIN is processed instantaneously.
- Fill out Form SS-4 and fax or mail to IRS. If you use fax, you can expect to get your EIN within four working days. If you send your application, you can expect your EIN within four weeks.
We’ve explained the various taxpayer-identification numbers that you need to be aware of as a business. Even immigrant companies can participate in business by getting ITINs to access ITIN loans from forward-leaning lenders.