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An SSN identifies you as a person. It comes from the Social Security Administration. An EIN identifies a business. It comes from the IRS, for free. Both are nine-digit taxpayer identification numbers. A sole proprietor with no employees can use their SSN for business taxes and client forms. You need an EIN once you hire someone, run a partnership or corporation, or owe employment or excise taxes. Even when it is not required, a free EIN lets you keep your SSN off the forms you send to every client.
Most people only ask about EIN vs SSN when a form forces the question: a client sends a W-9, a bank asks for a tax ID, or a new hire needs paying. The two numbers look alike and do different jobs. One belongs to you for life. The other belongs to a business, and a business can have one, change it, or not need one at all.
This guide compares the two side by side, then works through six real situations so you can see which number goes where. Getting the number right is part of the setup stage in our guide to the stages of starting a business, and it is quicker to settle now than to correct on a dozen forms later.
EIN vs SSN at a Glance
| SSN | EIN | |
|---|---|---|
| Stands for | Social Security number | Employer Identification Number |
| Identifies | You, as an individual | A business or other entity |
| Issued by | Social Security Administration | IRS |
| Format | XXX-XX-XXXX | XX-XXXXXXX |
| How you get it | Through the SSA, as a person | A free online application at IRS.gov |
| Required for | Working as an employee and filing your personal return | Employees, partnerships, corporations, employment and excise taxes |
| Goes on | Form W-4, your Form 1040, a W-9 if you have no EIN | Payroll returns, business tax returns, a W-9 if you have one |
Both are taxpayer identification numbers. The IRS lists five kinds, including the SSN and the EIN, and notes that the SSN is issued by the SSA while every other TIN is issued by the IRS. According to IRS Publication 1635, an EIN is a nine-digit number in the format XX-XXXXXXX, used to identify the tax accounts of employers and certain others who have no employees.
Which One to Use: Six Real Examples
The rules are easier to apply to a situation than to remember. Here is which number goes where in the cases that come up most for a small business:
| Situation | Use | Why |
|---|---|---|
| A freelancer with no employees gets a W-9 from a new client | SSN or EIN | The W-9 instructions say a sole proprietor who has an EIN may enter either. |
| A single-member LLC with no employees files its income tax | Owner's SSN | The LLC is disregarded, so its profit goes on the owner's personal return. |
| The same LLC hires its first employee | EIN | Payroll means employment taxes, and the IRS treats the LLC as its own entity for those. |
| Two friends start a business together | EIN | A partnership needs its own EIN, and a sole proprietor who takes on a partner needs a new one. |
| Opening a business bank account | EIN, if you have one | Banks often ask for one, and the IRS lets you request an EIN for banking even when tax rules do not require it. |
| Starting a new job as an employee | SSN | Form W-4 asks for your Social Security number, and your wages are reported under it. |
The pattern: your SSN follows you, and an EIN follows the business. Whenever the form is about you as a person, it wants your SSN. Whenever it is about a business that employs people, has partners or is a corporation, it wants an EIN.
Does a Sole Proprietor Need an EIN?
Not always. A sole proprietorship is a business owned by one person with no existence apart from them, so the IRS lets you run it under your SSN. According to the IRS EIN page, you need an EIN if you:
- Have workers on your payroll. Paying an employee means filing employment tax returns under an EIN.
- Owe employment, excise, or alcohol, tobacco and firearms taxes.
- Withhold tax on non-wage income paid to a nonresident alien.
You also need a new EIN, not your old one, if you incorporate or take on a partner and operate as a partnership, according to Publication 1635. A freelancer or one-person service business with none of these can stay on an SSN for as long as they like.
If you decide to get one, it costs nothing. The IRS online application issues the number immediately if it is approved, and the IRS warns against sites that charge a fee for it. The application has to be finished in one session and times out after 15 minutes of inactivity, so have your SSN and your business details ready before you start.
Aziz's take: Get the EIN even if you do not need it. It is free and takes one sitting, and from then on the W-9 you send to every new client carries a business number instead of your Social Security number. You are going to fill in a lot of those forms, and your SSN does not need to sit in every client's files.
EIN or SSN for a Single-Member LLC?
This is the case that confuses most people, because the answer depends on which tax you mean. By default the IRS treats a single-member LLC as disregarded as separate from its owner for income tax. The profit goes on your personal return, under your SSN. For employment taxes and certain excise taxes, the same LLC is treated as its own entity, and that is where an EIN comes in.
On a W-9, the instructions are explicit: a single-member LLC that is disregarded enters the owner's SSN, or the owner's EIN if they have one. An LLC taxed as a partnership or a corporation enters its own EIN. That includes an LLC that elects S corporation status, which is covered in LLC vs S corp. A multi-member LLC is a partnership by default, so it always needs an EIN.
If you are still choosing a structure, LLC vs sole proprietorship walks through the legal and tax differences first. The number you use follows from that choice, not the other way round.
EIN vs SSN vs ITIN
An ITIN is the third number that shows up in these comparisons. The IRS describes it as a tax processing number for certain nonresident and resident aliens, their spouses and dependents, who cannot get an SSN. In practice:
- SSN: for people eligible for one. Issued by the SSA.
- ITIN: for people who must file US taxes but cannot get an SSN. Issued by the IRS, and used on personal tax filings.
- EIN: for the business, whoever owns it. Issued by the IRS.
An ITIN holder who starts a business can still get an EIN. The online application asks for the responsible party's SSN or ITIN, so either works to apply.
Aziz's take: The question is never really which number is better. It is which one the form is asking about: you, or the business. Answer that first and the right box is obvious, whether you are starting a side hustle or hiring your first employee.