Starting or running a business in the United States often requires dealing with tax identification numbers. Two of the most commonly confused terms are Employer Identification Number (EIN) and Individual Taxpayer Identification Number (ITIN). If you’re an entrepreneur, freelancer, or international business owner looking to operate in the U.S., understanding the difference between EIN and ITIN is essential.

In this guide, we’ll break down EIN vs ITIN for business US, explain when you need each, how to apply, and the key differences that can impact your taxes, compliance, and ability to hire employees.

What is an EIN?

An Employer Identification Number (EIN) is a nine-digit number issued by the Internal Revenue Service (IRS) to identify businesses for tax purposes. Think of it as a Social Security Number (SSN) for companies.

Businesses need an EIN for a variety of reasons:

• To file federal and state taxes
• To hire employees and process payroll
• To open a business bank account in the U.S.
• To apply for certain licenses and permits

According to the IRS, almost every business except sole proprietors without employees will benefit from having an EIN. You can learn more directly from the IRS EIN application page

What is an ITIN?

An Individual Taxpayer Identification Number (ITIN) is also a nine-digit number, but it serves a very different purpose. The IRS issues ITINs to individuals who are not eligible for a Social Security Number (SSN) but still need to file taxes in the U.S.

Key points about ITINs:

• ITINs are used only for tax reporting, not for employment purposes.
• Foreign nationals, resident aliens, and dependents who don’t qualify for an SSN can use an ITIN.
• ITINs do not authorize work in the U.S. or provide eligibility for Social Security benefits.

For details, you can review the official IRS ITIN page

EIN vs ITIN for Business US: The Core Difference

While both EIN and ITIN are tax identifiers, they serve different groups and purposes.

• EIN: For businesses (companies, partnerships, corporations, and some sole proprietors).
• ITIN: For individuals who need to pay taxes but are not eligible for an SSN.

Here’s the simplest way to remember it:

• Businesses use EINs.
• Individuals without SSNs use ITINs.

Do You Need an EIN or ITIN to Start a Business in the US?

If you are a U.S. citizen or resident who already has an SSN, you’ll likely apply for an EIN when starting your business.

If you are a non-U.S. citizen looking to form a company or invest in the U.S., the situation can be more complex:

• If you want to register a business in the U.S. → You will need an EIN.
• If you want to report personal taxes without an SSN → You will need an ITIN.
• In some cases, you may need both if you are a foreign national managing a U.S. business.

The IRS provides specific guidance for foreign entities applying for an EIN on its international EIN application page

How to Apply for an EIN

Applying for an EIN is straightforward and free. You can apply online if you have a valid Taxpayer Identification Number (like an SSN or ITIN).

Steps to apply for an EIN:

1. Visit the official IRS EIN application portal
2. Complete the online application during business hours.
3. Receive your EIN immediately after submitting the form.

For foreign applicants without an SSN or ITIN, you can apply via Form SS-4 by mail or fax.

How to Apply for an ITIN

If you don’t qualify for an SSN but need to pay U.S. taxes, you must apply for an ITIN.

Steps to apply for an ITIN:

1. Fill out Form W-7, Application for IRS Individual Taxpayer Identification Number.
2. Submit it with your federal tax return.
3. Provide proof of identity and foreign status (such as a passport).
4. Mail it to the IRS or use an IRS-authorized Acceptance Agent.

For details, check the IRS ITIN application instructions

Common Situations Where EIN vs ITIN is Confusing

1. Foreign entrepreneurs

If you live outside the U.S. and want to open a U.S. business, you will need an EIN for your company. If you also need to report personal income, you may also need an ITIN.

2. Freelancers and contractors

U.S. freelancers with an SSN typically don’t need an ITIN. But if you’re a foreign freelancer earning U.S. income, an ITIN is necessary for tax filing.

3. Hiring employees

If you plan to hire staff, you must have an EIN to process payroll taxes and comply with IRS employer requirements

EIN vs ITIN for Business Bank Accounts

Most U.S. banks require an EIN to open a business bank account. An ITIN alone is not enough because it only identifies an individual taxpayer, not a business entity.

This is why even non-U.S. citizens forming LLCs or corporations in the U.S. must obtain an EIN.

Tax Filing Implications of EIN vs ITIN

• EIN: Used by businesses to file corporate, partnership, or payroll taxes.
• ITIN: Used by individuals (foreign nationals, dependents, nonresidents) to file personal income tax returns.

The IRS provides detailed resources on business tax filing requirements and individual tax filing

Pros and Cons: EIN vs ITIN for Business US

Advantages of EIN

• Essential for businesses to operate legally
• Allows opening of U.S. business bank accounts
• Required to hire employees
• Adds credibility to your business

Advantages of ITIN

• Allows non-U.S. residents to meet tax obligations
• Necessary for foreign investors reporting U.S. income
• Helps dependents and spouses file taxes without SSNs

Limitations of EIN

• Does not apply to personal tax filing
• Requires paperwork for foreign applicants without SSN/ITIN

Limitations of ITIN

• Cannot be used to work legally in the U.S.
• Cannot be used to open a business bank account
• Does not provide Social Security benefits

READ MORE: Business Bank Account for LLC: A Complete Guide

FAQs: EIN vs ITIN for Business US

1. Can I use an ITIN instead of an EIN for my business?
No. An ITIN is for personal tax reporting, while an EIN is required for businesses.

2. Do foreign nationals need both EIN and ITIN?
Sometimes, yes. If you own a U.S. company, you need an EIN. If you also need to file personal taxes without an SSN, you’ll need an ITIN too.

3. Can I hire employees with only an ITIN?
No. You must have an EIN to hire employees legally in the U.S.

4. Is there a fee to apply for an EIN or ITIN?
No. Both applications are free through the IRS. Beware of third-party services charging fees.

Conclusion: Which One Do You Need?

When it comes to EIN vs ITIN for business US, the distinction is clear:

• Use an EIN if you are starting or operating a business.
• Use an ITIN if you need to file taxes but don’t qualify for an SSN.

In some cases, particularly for non-U.S. citizens, both numbers may be necessary. Understanding which applies to you will ensure compliance with U.S. tax laws, allow smoother business operations, and prevent legal or financial setbacks.

For official guidance, always refer to the IRS website or consult with a licensed tax professional.