EIN (Employee Identification Number) or Federal Tax Id number
The Internal Revenue Service (IRS) taxes international business entities as well as foreigners living within the U.S or resident aliens, and non US residents on the income earned within the country. This income is considered to be US sourced income and hence has to be taxed. In order to pay taxes, such business entities should possess a Tax Identification Number, which is also known as an Employer Identification Number. The Employer Identification Number or EIN for non US businesses is issued by the IRS and ensures such businesses are able to comply with tax reporting or withholding obligations related to any international transactions.
What is an EIN?
An EIN is a unique nine-digit Employer Identification Number that is also known as the Federal Tax Identification Number or the Federal Employer Identification Number (FEIN). This unique number is assigned to different forms of businesses by the Internal Revenue Service (IRS). EIN is used for reporting of employment taxes by business entities and is also considered as a way of identifying the entity. An EIN for a non US business is also issued by the IRS if the entity in question has a US sourced income that is subject to withholding.
Why do I need an EIN for a non US business?
The US is home to some of the largest business corporations, e-commerce, retail, and other companies in the world. In fact, the Fortune 500 companies represent almost two-thirds of the economy of the country with $14.2 trillion in revenue generated. The US is also a global marketplace and hence home to several non US based businesses. If you are a non-US resident planning to start a new business or expand existing business to US markets, there are certain tax requirements that you will be required to consider. One of the important requirements is that of EIN for non US residents or non US businesses.
According to the Internal Revenue Service (IRS), a non-resident individual operating a business in the US that generates income is required to possess either an Individual Taxpayer Identification Number (ITIN) or an EIN for non US residents to indicate on their W-8BEN that they are qualified for any treaty withholding exemptions. The IRS also makes EIN mandatory for any international business owners planning to register a company in the US. An EIN is also necessary for non US businesses as it shows they have a proper legal status and it will be easier for such businesses to open bank accounts.
If you are wondering how to get an EIN then simply click here!