If you’re starting a business or making an investment, you may have heard the terms “EIN” or “Tax ID.” These are important terms that you need to know, and they can be confusing. Specifically, an EIN is a nine digit code that the IRS uses to identify employers and tax paying entities. When used in an employment context, this number is usually referred to as an EIN, or Employer Identification Number. When used as a federal tax ID, it’s usually referred to as a Tax ID, but there are exceptions and both refer to the same nine digit number, which can be acquired online.
However, complicating this is that a business or entity could have many tax IDs. For instance, an individual might have a Social Security Number or ITIN: these are both “tax IDs,” but they are not an EIN. A business could further have a sales tax number, local tax number, and state tax number, and all of these may be referenced as a tax ID, but not the federal Tax ID. An EIN always means an EIN, but a Tax ID could mean many things, and consequently has to be disambiguated.