Many countries use different tax identification numbers. Such is the case in the United States, where several company identification numbers are used. They may be applied for specific purposes or used more universally. Incorrectly used numbers can cause problems when dealing with the US tax authorities, the Internal Revenue Service. It is therefore advisable to find out which basic identification numbers used in the US are applicable before starting a business. The two basic numbers are TIN and EIN. What are they used for and what are the differences of EIN vs TIN?
Multiple tax numbers used in the US
There are a number of taxpayer identification numbers used in the United States. The first important number is the TIN, which is issued by the Social Security Administration or the Internal Revenue Service. It represents a set of tax numbers that are used when filing tax returns and other tax-related documents. For different purposes, a variety of TINs may be used. Another significant identification number is the EIN, which identifies a company’s national insurance number. It is called in various ways, including Federal Employer Identification Number and Federal Tax Identification Number. Knowing this allows you to navigate the US tax system more efficiently.
Several ways to get an identification number
To obtain an EIN, you will need to complete a form marked SS-4 and send it to the US office via fax. The identification number should be provided within 4-5 days. The second method is to apply through the Internal Revenue Service website. This is by far the quicker way, plus it allows you to check for errors and ensure that all the information necessary to obtain an EIN is submitted. This way, the number should be issued within 1-2 days. Another way is the traditional telephone contact, but it requires filling in the Third Party Designee field on the SS-4 form. The last option is to apply by post, but then the documents must be sent to the physical address provided on the registration form. This is the slowest method and currently not recommended.
Use of an EIN identification number
The EIN is used for operations such as filing tax returns, opening company bank accounts, opening merchant accounts and applying for various business-related licences. This number is intended for companies, but not every entity is obliged to have one. Companies that do not have employees can settle their taxes using a Social Security Number (SSN for short). It consists of nine digits and in practice stands for the national insurance number. It is used by all sole proprietorships and limited liability companies (referred to as LLCs for short). The EIN can also be used by non-profit organizations, partnerships, and government agencies.
Professional tax advisory service
Regardless of the nature of the business, the information provided to the tax authorities must always be up-to-date and complete. Otherwise, the company risks the possibility of a penalty. For this reason, a good solution is to use the services of a professional tax consultancy office. One of the best knowns is INTERTAX, which offers comprehensive solutions for any company. Detailed information on the US tax system, including the EIN vs TIN differences, can be found at the following website: https://polishtax.com/ein-vs-tin-whats-the-difference/. In this way, you can supplement your knowledge and ensure that your business is always run in accordance with the dynamically changing tax laws.