TIN vs EIN: Tax ID Basics for Business Owners

When you start filling out tax forms, merchant applications, or bank paperwork, you’ll see a lot of similar phrases: tax ID, TIN, EIN, federal ID number. It’s easy to assume they all mean the same thing. Then a form suddenly asks whether you should enter TIN vs EIN or EIN vs SSN, and things get confusing fast.

At Swipesum, we talk to founders and finance teams every week who are setting up payroll, opening business bank accounts, or turning on payment processing for the first time. Getting your tax identification numbers right is a small detail that prevents big headaches later, specially when the IRS, your bank, and your payment processor all need to match the same data.

In this guide, we’ll break down EIN vs TIN (tin vs ein) in plain language, explain when an EIN is actually a type of TIN, and show which tax ID different types of businesses typically use. This article is for general information only and isn’t tax or legal advice, so always confirm your specific situation with a qualified professional.

Understanding Tax Identification Numbers

Taxpayer Identification Number (TIN) Explained

A Taxpayer Identification Number (TIN) is the umbrella term the IRS uses for the numbers it assigns to identify taxpayers on federal tax returns and other tax forms. A TIN can belong to an individual, a business, or another type of entity.

Several different numbers count as a TIN:

• Social Security Number (SSN) – the personal tax ID for most U.S. individuals.
• Employer Identification Number (EIN) – a business tax ID for entities like LLCs, corporations, partnerships, estates, and trusts.
• Individual Taxpayer Identification Number (ITIN) – used when someone isn’t eligible for an SSN but still has U.S. tax reporting obligations.
• Adoption Taxpayer Identification Number (ATIN) and Preparer Tax Identification Number (PTIN) – used in more specific situations.

Any time a federal tax form asks for a “Taxpayer Identification Number (TIN)”, it’s asking for whichever of these numbers applies to you or your business.

Employer Identification Number (EIN) Explained

An Employer Identification Number (EIN) is one specific type of TIN. It’s a nine-digit number the IRS assigns to identify business entities and certain other organizations for tax purposes. You may also hear it called a Federal Employer Identification Number (FEIN) or simply a business tax ID.

Most U.S. businesses eventually need an EIN, including:

• LLCs with more than one member
• Corporations and partnerships
• Businesses that have employees
• Entities that open business bank accounts, apply for business credit, or set up merchant accounts to accept card payments

For many founders, getting an EIN is the moment their company stops being “just an idea” and becomes a separate legal and financial entity with its own tax identity.

Who Needs a Tax ID Number?

Individuals and Businesses

• Individuals: Those who are not eligible for an SSN may need an ITIN. For example, a foreign national investing in U.S. real estate may require an ITIN to fulfill tax obligations.
• Businesses: Entities, including sole proprietorships, partnerships, and corporations, need an EIN. A recent survey by the National Federation of Independent Business found that 73% of small business owners believe having an EIN is essential for their business operations.
• Estates and Trusts: These entities require an EIN to file tax returns and report income. As noted by the IRS, “Estates and trusts that generate income must have an EIN.”
• Paid Tax Preparers: They need a Preparer Taxpayer Identification Number (PTIN) to prepare federal tax returns.

Federal Tax Identification Number vs. EIN

A Federal Tax Identification Number is another term for an EIN. Both terms refer to the same nine-digit number assigned by the IRS to businesses and other entities. While the terms are often used interchangeably, EIN is the more commonly used term.

Applying for a Tax ID Number

How to Get a TIN or EIN

• ITIN: Individuals can apply for an ITIN by submitting Form W-7 to the IRS.
• EIN: Businesses can apply for an EIN online through the IRS website or by submitting Form SS-4. The process is straightforward; once completed, you can receive your EIN immediately.
• PTIN: Paid tax preparers can apply for a PTIN online through the IRS website or by submitting Form W-12.

Business Entity and Tax ID Requirements

• Sole Proprietorships and Single-Member LLCs: These may not need an EIN but can benefit from having one to separate personal and business finances. One of our clients, a freelance graphic designer, discovered the value of having an EIN to protect their SSN when dealing with clients.
• Multi-Member LLCs and Corporations: These entities need an EIN to file tax returns and report income. For example, a tech startup we assisted with multiple partners was required to obtain an EIN from the outset to facilitate business operations.
• Businesses with Employees: Any business that hires employees must obtain an EIN to file employment tax returns and report payroll taxes. A local café we worked with initially operated without employees but quickly realized that as they expanded and hired staff, having an EIN streamlined their payroll and compliance processes.

Navigating the complexities of EINs and TINs is crucial for your business's success. At Swipesum, we're here to simplify the process and provide personalized guidance, ensuring you have the right tools to thrive in today’s competitive landscape.

Types of Tax ID Numbers

• Employer Identification Number (EIN): Used to identify businesses and other entities for tax purposes.
• Social Security Number (SSN): Used to identify individuals for tax purposes.
• Individual Taxpayer Identification Number (ITIN): Used to identify individuals who are not eligible for an SSN.
• Preparer Taxpayer Identification Number (PTIN): Used to identify paid tax preparers.
• Adoption Taxpayer Identification Number (ATIN): Used to identify adopted children who do not have an SSN.

Real-Life Success Stories and Insights

Many businesses have experienced significant advantages by understanding and securing the appropriate tax identification numbers. For instance, a local bakery followed the steps to obtain their EIN, enabling them to open a business bank account and apply for a small business loan to expand their operations, ultimately leading to significant growth in sales.

As Michael Seaman, CEO of Swipesum, emphasizes, “Having a clear understanding of your tax obligations and securing the necessary identification numbers can set the foundation for your business’s success.” This insight underlines the importance of being proactive in navigating the complexities of business operations.

Conclusion

At a high level, the distinction is simple:

• TIN is the umbrella term the IRS uses for tax identification numbers.
• EIN is one specific type of TIN used for businesses and certain other entities.
• Individuals generally use an SSN as their TIN, while business entities use an EIN.

Understanding EIN vs TIN makes life easier any time you:

• File tax returns for yourself or your business
• Complete Form W-9 or other vendor paperwork
• Open a business bank account or apply for a loan
• Set up merchant accounts and payment processing

When the IRS, your bank, and your payment partners all have the same, correct tax ID on file, onboarding is smoother, audits are less stressful, and you avoid unnecessary delays.

If you’re building a company and want to be sure your tax IDs are aligned with how you accept payments, Swipesum can help. Our team acts as a chief payments officer for your business, reviewing the way you process payments today, helping you choose the best solution for where you’re headed, and making sure details like TIN vs EIN don’t create friction as you grow.