As a business owner, you have probably come across the acronym DUNS and EIN. Both are business identification numbers but have different purposes. They are essential to businesses that plan to work with other companies and grow exponentially.
DUNS, which stands for Data Universal Numbering System, is a unique 9-digit identifier that tracks your business' credit history and is used to perform background checks. In 2022 it was updated and is now called a UEI (Unique Identity Identifier), although it serves the same purpose.
On the other hand, EIN, which stands for Employer Identification Number, is also a unique 9-digit identifier the Internal Revenue Service (IRS) assigned to identify businesses for tax purposes.
Companies that want to build their business credit and perform exceptionally well acquire both numbers. To give you more insights into the two numbers, we will discuss how they work, how to get them, and when to use them.
How Does a DUNS Number Work?
When you register for a DUNS number with Dun and Bradstreet, they collect information about your company. These details include:
- Company's name and address
- Company's structure and size
- Industry classification
- Financial data
- Credit history
- Legal filings
Afterward, they store the information in their database, and authorized parties can access it. The DUNS number helps in the credit reporting process, and interested parties can access a business's credit report history.
According to Dun and Bradstreet, the DUNS number is persistent, consistent, and unique. It doesn't change even if your company's structure changes or you have applied for a Doing Business As (DBA).
When to Use a DUNS Number
Most organizations use the DUNs number to track a business's credit history or to perform background checks before they can work with them. The following are examples of companies that use it:
- Government agencies: Government institutions require you to have a DUNS number to receive grants or bid on contracts. They use it to verify a business's identity and check its creditworthiness.
- Financial institutions: Financial lenders may use the DUNS number to evaluate your business credit standing before they extend credit or give you a loan.
- Suppliers: Large companies use the DUNS number to assess the financial stability of a company and check its track record of timely payments.
- Business partners: Individuals or companies planning to sign a business partnership agreement use the DUNS number to assess the creditworthiness and reliability of potential partners.
How Do I Get a DUNS Number?
As of April 2022, SAM.gov phased out the DUNS number and replaced it with Unique Entity Identifier (UEI). Fortunately, if you have a DUNS number, they have already assigned you a UEI number. You don't need to re-apply. For new applicants, the process is similar to the one outlined below, but you will apply via SAM.gov instead of D&B.
Once you start a company and have a business plan, you can get a DUNS number, now called a UEI, by applying directly through the SAM.gov website.
- Go to the website, click on the "get started" button and follow the steps.
- Set up an account.
- Sign into your new account.
- Prepare your data for entry into the system using this checklist of what you will need
When you finish this process, you will be assigned a UEI and will be officially registered in the system.
How Does an EIN Work?
An EIN has a totally different process than a UEI. Since the IRS issues an EIN, it is used to identify a business mainly for tax purposes. For instance, if you have a business with employees, you must obtain an EIN and use it to file federal tax returns, such as employment tax, income tax, and payroll tax.
Banks and financial institutions often require businesses to provide their EIN when opening a bank account or applying for a loan. They will use it to verify your business's identity and track your financial transactions.
In extreme situations, an EIN may be used in legal matters. For example, when a business receives a lawsuit or files for bankruptcy, the involved parties can use the number to track its financial activities.
When to Use an EIN
You can use an EIN for various business purposes related to tax and financial reporting. Situations you can use an EIN are as follows:
- Obtaining business credit from financial institutions
- Reporting and paying taxes to IRS
- Establishing a business entity
- Reporting sales tax
- Filing information returns
Quote Block: An EIN can change under special circumstances, such as if your business's legal structure changes. Your EIN might have to change together with the legal entity.
How to Get an EIN
Before applying for an EIN, you must determine if your business is eligible. For example, a sole proprietorship is not required to have an EIN. Follow these steps if you have employees or are registered as an LLC, Corporation, or partnership:
- Go to the IRS website and click on the "apply for an EIN" button
- Fill out the application, requiring basic information such as business name, address, and type of business.
- Review the information and click submit.
- Once they verify the information, you will receive an email with the assigned EIN.
DUNS vs. EIN
As we have seen so far, a DUNS/UEI and an EIN are more different than similar. They are both used to identify a business but are issued by different authorities. The following table gives a comparison between DUNS and EIN.
| DUNS/UEI | EIN | ||
|---|---|---|---|
| Identifies a business for credit and business transactions | Identifies a business for tax purposes | Issued by Dun and Bradstreet (changed to SAM.gov) | Issued by IRS |
| Any business can apply for it | Required for businesses with employees | ||
| Used globally | US-centered | ||
| Does not change throughout the life of a business | Can change when the business modifies or changes its structure |
Running a business requires you to obtain various numbers and documents. This is why it is important to know what each one is used for.
Sources:
As a business owner, you have probably come across the acronym DUNS and EIN. Both are business identification numbers but have different purposes. They are essential to businesses that plan to work with other companies and grow exponentially.
DUNS, which stands for Data Universal Numbering System, is a unique 9-digit identifier that tracks your business' credit history and is used to perform background checks. In 2022 it was updated and is now called a UEI (Unique Identity Identifier), although it serves the same purpose.
On the other hand, EIN, which stands for Employer Identification Number, is also a unique 9-digit identifier the Internal Revenue Service (IRS) assigned to identify businesses for tax purposes.
Companies that want to build their business credit and perform exceptionally well acquire both numbers. To give you more insights into the two numbers, we will discuss how they work, how to get them, and when to use them.
How Does a DUNS Number Work?
When you register for a DUNS number with Dun and Bradstreet, they collect information about your company. These details include:
- Company's name and address
- Company's structure and size
- Industry classification
- Financial data
- Credit history
- Legal filings
Afterward, they store the information in their database, and authorized parties can access it. The DUNS number helps in the credit reporting process, and interested parties can access a business's credit report history.
According to Dun and Bradstreet, the DUNS number is persistent, consistent, and unique. It doesn't change even if your company's structure changes or you have applied for a Doing Business As (DBA).
When to Use a DUNS Number
Most organizations use the DUNs number to track a business's credit history or to perform background checks before they can work with them. The following are examples of companies that use it:
- Government agencies: Government institutions require you to have a DUNS number to receive grants or bid on contracts. They use it to verify a business's identity and check its creditworthiness.
- Financial institutions: Financial lenders may use the DUNS number to evaluate your business credit standing before they extend credit or give you a loan.
- Suppliers: Large companies use the DUNS number to assess the financial stability of a company and check its track record of timely payments.
- Business partners: Individuals or companies planning to sign a business partnership agreement use the DUNS number to assess the creditworthiness and reliability of potential partners.
How Do I Get a DUNS Number?
As of April 2022, SAM.gov phased out the DUNS number and replaced it with Unique Entity Identifier (UEI). Fortunately, if you have a DUNS number, they have already assigned you a UEI number. You don't need to re-apply. For new applicants, the process is similar to the one outlined below, but you will apply via SAM.gov instead of D&B.
Once you start a company and have a business plan, you can get a DUNS number, now called a UEI, by applying directly through the SAM.gov website.
- Go to the website, click on the "get started" button and follow the steps.
- Set up an account.
- Sign into your new account.
- Prepare your data for entry into the system using this checklist of what you will need
When you finish this process, you will be assigned a UEI and will be officially registered in the system.
How Does an EIN Work?
An EIN has a totally different process than a UEI. Since the IRS issues an EIN, it is used to identify a business mainly for tax purposes. For instance, if you have a business with employees, you must obtain an EIN and use it to file federal tax returns, such as employment tax, income tax, and payroll tax.
Banks and financial institutions often require businesses to provide their EIN when opening a bank account or applying for a loan. They will use it to verify your business's identity and track your financial transactions.
In extreme situations, an EIN may be used in legal matters. For example, when a business receives a lawsuit or files for bankruptcy, the involved parties can use the number to track its financial activities.
When to Use an EIN
You can use an EIN for various business purposes related to tax and financial reporting. Situations you can use an EIN are as follows:
- Obtaining business credit from financial institutions
- Reporting and paying taxes to IRS
- Establishing a business entity
- Reporting sales tax
- Filing information returns
Quote Block: An EIN can change under special circumstances, such as if your business's legal structure changes. Your EIN might have to change together with the legal entity.
How to Get an EIN
Before applying for an EIN, you must determine if your business is eligible. For example, a sole proprietorship is not required to have an EIN. Follow these steps if you have employees or are registered as an LLC, Corporation, or partnership:
- Go to the IRS website and click on the "apply for an EIN" button
- Fill out the application, requiring basic information such as business name, address, and type of business.
- Review the information and click submit.
- Once they verify the information, you will receive an email with the assigned EIN.
DUNS vs. EIN
As we have seen so far, a DUNS/UEI and an EIN are more different than similar. They are both used to identify a business but are issued by different authorities. The following table gives a comparison between DUNS and EIN.
| DUNS/UEI | EIN | ||
|---|---|---|---|
| Identifies a business for credit and business transactions | Identifies a business for tax purposes | Issued by Dun and Bradstreet (changed to SAM.gov) | Issued by IRS |
| Any business can apply for it | Required for businesses with employees | ||
| Used globally | US-centered | ||
| Does not change throughout the life of a business | Can change when the business modifies or changes its structure |
Running a business requires you to obtain various numbers and documents. This is why it is important to know what each one is used for.
Sources:
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