A Taxpayer Identification Number is a generic term used by the Internal Revenue Service to designate the types of numbers which it allows to be used for tax and identification purposes. While these numbers can be used for identification purposes, they are primarily used to track payments to individuals for federal income tax and other tax purposes.
The possibilities for types of taxpayer ID numbers include:
Social Security number (SSN). A social security number is the most common identifier for personal identification and tax purposes.
Employer ID number. An Employer ID (or EIN, for short) is a federal tax identification number for businesses. Although it’s labeled as an identifier for “employers,” you don’t have to have employees to need an EIN.
Individual Taxpayer ID number (ITIN)
What is an Individual Taxpayer ID Number (ITIN)?
An Individual Taxpayer Identification Number (or ITIN) is nine-digit number issued by the IRS to individuals who must have an identifying number but who are not eligible for a Social Security Number or an Employer ID Number.
ITIN’s are for tax reporting purposes only; they cannot be used for identification purposes. You must get a Social Security number from new employees to be used on Form W-4. An ITIN cannot be used to authorize work in the U.S. or provide eligibility for Social Security or other benefits.
What Taxpayer ID Do LLC’s, Partnership’s, or Corporation’s Use?
Businesses that are registered with the IRS typically use an Employer ID number for business identity. An Employer ID number (EIN) is used by all other types of businesses, even if the business has no employees. Banks often require a new business to have an EIN before they can open a business bank account. You can apply for an EIN online at the IRS website.
Do Businesses Need an ID Number?
If you do business in a state, including having income, hiring employees or selling goods or services, you will also need to get a state tax identification number for . This number is issued when you register with your state government (Secretary of State).