What’s theDifference Between a Tax ID Number and a Corporate Number?
Simone Johnson
Tax identification numbers and corporatenumbers are similar concepts with some important distinctions. A tax ID numberis used to identify different kinds of taxpayers, while a corporate number isused by limited liability companies (LLCs) or other corporations. Understandingthe differences between the types of identification numbers makes filing taxeseasier, so keep reading to learn the different kinds of ID numbers you mightneed to operate your business.
What is a tax ID number? A taxidentification number, or TIN, is an ID number the IRS uses to administer taxlaws. The purpose is to assign a number to each taxpayer, whether that’s anindividual or a business. Each person’s or business’s number is unique to them,which makes it easy for the government to track.
This number is assigned by the IRS and usedby businesses to file tax returns, pay taxes and secure approval to conductother business operations. When you first start a business, you apply for ataxpayer ID number through the IRS.
What is a corporate number?
Corporations and LLCs receive a corporatenumber upon approval of their articles of incorporation. This number isequivalent to the federal tax identification number, or an employmentidentification number.
“A corporate tax ID is interchangeably usedwith EIN, which applies to entities other than corporations as well,” SelvaOzelli, international tax attorney and CPA, told Business News Daily.
In California, however, corporations receiveseven-digit corporation numbers from the California Secretary of State orFranchise Tax Board, and LLCs receive a 12-digit corporate number. The companycan then use this number to apply for an EIN. In most states, though, acorporate number is the equivalent of an EIN.
What is the difference between a tax IDnumber and a corporate number?
The term “taxpayer identification number”refers to five different types of numbers used to identify taxpayers:
(1) Social Security numbers
(2) Employer identification numbers
(3) Individual taxpayer identificationnumbers
(4) Taxpayer identification numbers forpending U.S. adoptions
(5) Preparer tax identification numbers
For businesses, EINs are the most relevanttax ID numbers. These help the government track business taxation at thefederal level. Sole proprietorships and single-member LLCs may use SocialSecurity numbers as their business’s tax ID number.
The terms “corporate number” and “EIN” canbe used interchangeably. The official term used by the IRS and other governmententities is “employer identification number” or “federal tax identificationnumber.”
Tax ID numbers are used for federal taxationand apply to both individuals and businesses, whereas corporate numbers andEINs apply solely to businesses.
Types of tax identification numbers
The five types of tax ID numbersdifferentiate the wide range of taxpayers. Here’s a detailed look at each type.
Employer identification number (EIN)
This is also referred to as a “federal taxidentification number” or “federal employer identification number.” EINsidentify business entities, like Social Security numbers for businesses.
EINs for publicly traded companies andnonprofits are public information. Nonprofit EINs are available so that peopleand businesses donating to the nonprofit can confirm that it holds tax-exemptstatus from the IRS. This is a good way to confirm a nonprofit is registeredcorrectly with the IRS before donating to the organization. Businesses canapply for an EIN through the IRS website.
“Business that are registered with the IRStypically use an employer ID number for the business identity,” said Ozelli.“An EIN is used by all other types of businesses, even if the business has noemployees… The single-member LLC business type is an exception. If you are thesole owner of an LLC, you should use your Social Security number, not the EINof the business.”
Social Security number (SSN)
To receive a Social Security number, youeither need to be a U.S. citizen or a legal alien. An SSN is a nine-digitidentification number that is formatted like “NNN-NN-NNN.” An individual needsthis number to get a job and to collect Social Security and other governmentbenefits. The Social Security Administration stresses the importance of keepingthese numbers safe and private. Some businesses, like sole proprietorships, usethe owner’s personal Social Security number on tax forms related to thebusiness.
“An employer ID and a Social Security numberare both tax IDs,” said Tom Wheelwright, certified public accountant and CEO ofWealthAbility. “Nonresidents of the U.S. can get a separate individual taxpayeridentification number to report your personal income to the IRS.”
Individual taxpayer identification number(ITIN)
Formatted just like a Social Securitynumber, an ITIN is “a tax processing number only available for certainnonresident and resident aliens, their spouses, and dependents who cannot get aSocial Security number,” according to the IRS.
Taxpayer identification number for pendingU.S. adoptions (ATIN)
An ATIN is a temporary nine-digit code forthose adopting a U.S. citizen or resident child for cases where the adoptingtaxpayers are unable to get a Social Security number before filing taxes. Thisis a very specific use case, and this form of tax ID is personal in nature.
Preparer tax identification number (PTIN)
Paid tax preparers are required to use PTINson any tax returns they prepare. You can apply for this number online or with apaper form.
Additionally, there are state tax IDnumbers, which are only used to report state taxes. Interested in finding theright online tax software to help your small business? Check out our reviewsand best picks.
Where can I find my tax ID numbers?
Understanding the different types of tax IDnumbers available to your business is the first step. It’s also important toknow what paperwork is required and where you can access this information.
Social Security number
You can find your SSN on your SocialSecurity card. You have to provide it on several important documents, like yourW-2 form, tax returns and bank applications.
If you lost your card and can’t rememberyour number, you can fill out a Social Security card application online, whichyou can print and turn in to your local Social Security office along with theappropriate documents. If you want to check your SSN online, you can set upyour Social Security Administration account as long as you can provide theappropriate identification.
Employer identification number
The IRS assigns your EIN. To obtain one, youwill need to complete and file Form SS-4. You can file the form online, by mailor fax, or over the phone if your business started outside of the UnitedStates.
Individual taxpayer identification number
To file for your ITIN, mail a completed FormW-7, proof of your identity and any foreign state documentation to the IRS atthis address:
Internal Revenue Service Austin Service CenterITIN Operation P.O. Box 149342 Austin, TX 78714-9342
You can also submit your ITIN application inperson through an IRS-authorized Certifying Acceptance Agent program, orcontact your local IRS Taxpayer Assistance Center to have the IRS send you yourITIN by mail.
Taxpayer identification number for pendingU.S. adoptions
You can get your ATIN by filing Form W-7 A.You may also get this application in person at the IRS office or by calling1-800-829-3676.
Preparer tax identification number
You can obtain your PTIN online. You canalso file Form W-12, which will take about four to six weeks to process.
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