Basics of EIN and SSN
An Employer Identification Number (EIN) is a nine-digit number assigned by the IRS to identify a business entity. An EIN is used for tax filing and reporting purposes. A Social Security Number (SSN) is a nine-digit number issued by the Social Security Administration to individuals. The SSN tracks an individual’s income and employment information.
EINs identify business entities, while SSNs identify individuals. The two numbers are not linked or associated.
The Importance of EIN for Businesses
You should get an EIN even if you are a sole proprietor, as it helps protect your SSN from identity theft. An EIN is required if you have employees, file certain business taxes, or open a business bank account.
EINs are public information. Keep your EIN safe to prevent fraud. Using your SSN as your EIN gives criminals access to personal information.
Applying for an EIN
You can apply for an EIN online if your business is located in the US. You need a valid Taxpayer Identification Number to apply. Unless your business is a disregarded entity, you must use an EIN when filing taxes.
EIN FAQs
Why does EIN require SSN?
An EIN is required to help protect your SSN from identity theft and is mandatory for certain business activities, such as filing taxes, hiring employees, or opening business bank accounts.
Can I use my EIN in place of my SSN?
You should not use your SSN in place of your EIN as it could increase the risk of personal information access and identity theft. Use an EIN for all business-related tax filings.