Federal Tax Id for non-US business
An Employer Identification Number (EIN) is a Federal Tax Identification Number that is required by entities conducting business in the USA. The primary purpose of the EIN is to identify a business entity so that it can be taxed accordingly by the Internal Revenue Service (IRS). This holds true even when you are living abroad and are considering EIN for non US business.
Introduction to EIN for Non-US Business
If you own a non-US business and are wondering what is the primary requirement for conducting business in the U.S then this is the right guide for you. An EIN (Employer Identification Number) is a Federal Tax ID Number that most businesses whether based in the US or outside require. This guide has been created specifically to answer some of the common queries pertaining to EIN for non US businesses and to provide relevant information on the requirements for non US businesses to apply for EIN, the process of application, and how it is different from other forms of Tax ID like ITIN and SSN.
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!
SSN or Social Security Number
One of the most common queries that non US businesses have is whether they are required to apply for a Social Security Number (SSN) in order to conduct their business in the US. There are many who are under the misconception that an SSN is required to apply for an EIN for non US business. So, let us try and understand what an SSN is and whether non U.S residents or businesses require it or not.
What is an SSN?
A Social Security number or SSN is a unique nine-digit number that is issued to mainly individuals. An SSN can only be issued to an individual who is a U.S. citizen, permanent resident, or temporary working resident as governed by section 205(c)(2) of the Social Security Act. The SSN is issued by the United States Social Security Administration (SSA), which is an independent agency of the U.S Federal Government. The primary objective of the SSN was to track individuals but now it is considered as the de facto national identification number for taxation purposes.
It is important to note that EIN for non US residents are issued when such foreigners are involved in starting a business in the USA that generates revenue in the country itself. Similarly, a non US citizen or resident authorized to work in the country can apply to the Department of Homeland Security (DHS) and obtain a Social Security number. The Social Security number is required to work in the US, collect Social Security benefits, and to receive any other government services. The form SS-5 has to be submitted to apply for a social security number.
Do I need SSN to get an EIN for non US business?
The greatest difference between an SSN and EIN is that the former is issued to individuals while the latter is issued to a business. If you are not a U.S Citizen but are planning to register a business in the U.S then you will have to apply for an EIN for non US business and not an SSN. The Employer Identification Number (EIN) can be obtained without a Social Security Number (SSN) although you may require another form of taxpayer identification known as Individual Taxpayer Identification Number (ITIN).
ITIN or Individual Tax Identification Number
A business in the USA may require different types of identification numbers but business owners and employees are often confused when it comes to the Individual Taxpayer Identification Number (ITIN). Some of the most common queries include how this number is different from EIN and whether ITIN is required prior to filing for EIN for non US business. The only way you can derive clarity on ITIN is through understanding what it really is and who really needs this number.
What is ITIN?
The ITIN or Individual Taxpayer Identification Number is a tax processing number that is issued by the Internal Revenue Service (IRS). Similar to EIN and SSN, the ITIN is also a nine-digit number. The ITIN number is generally issued to those individuals that do not have a valid SSN or are not eligible for obtaining a U.S. Social Security Number but according to law, they are required to file an Individual Income Tax Return. You can obtain an ITIN by submitting Form W-7 along with all required identification documents as mentioned by IRS. The important question is whether you will be required to obtain an ITIN for filing EIN for non US residents.
Do I need an ITIN to get an EIN for a non US business?
You do not need an ITIN to apply for and obtain an EIN for a non US business. At the same time, it is an undeniable fact that having an Individual Taxpayer Identification Number (ITIN) can be beneficial. One of the salient aspects is being able to apply for an EIN online. It is also important to understand that ITIN is for individual taxes and not business tax. If you are a foreign based national starting a business in the U.S and are going to pay income tax in the U.S then applying for an ITIN would be beneficial.
Getting EIN without SSN or ITIN
If you are a non US resident planning to register your business in the country; you will be required to apply for business EIN for non US residents. The question is whether it is possible to obtain an Employer Identification Number even if you don’t possess a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).
How Does a Non U.S. Citizen Obtain an EIN without a SSN or an ITIN?
According to the Internal Revenue Service (IRS), if you are a foreign citizen planning to register your business in the USA, you can obtain your EIN without the need for a SSN or an ITIN. As mentioned previously, both SSN and ITIN are meant for payment of individual taxes. The SSN is for US citizens while the ITIN can be used for both US and non-US citizens. The only drawback is that without an ITIN, you will not be able to file business EIN for non US residents online but you can file for the same using other processes.
In order to file an EIN for a non US business, the owner of such a business will be required to fill and submit IRS Form SS-4 – Application for Employer Identification Number (EIN). You can file the form using any one of the methods as mentioned below:
- Phone: According to the IRS, an international EIN applicant can receive their business EIN for non US residents by phone. This option is applicable to those who don’t have any legal residence, principal office or agency, or principal place of business in the U.S. You can call the IRS at 267-941-1099 between 6:00 a.m. and 11:00 p.m. (Eastern Time), Monday through Friday, to obtain your EIN.
- Fax: You can also apply for and obtain EIN for non US businesses by fax. The fax number for filing within the U.S is (855) 215-1627 and that of filing outside the U.S is (304) 707-9471.
- Mail: You can also file business EIN for non US residents through mail.
Third party designee
A ‘Third Party Designee’ or the “Checkbox” is used in applications for business EIN for non US residents only to fulfill the purpose of authorization. The authorization is provided to ensure the following:
- The authorization ensures that you have an individual to represent you or your business before the IRS in matters related to federal tax. This includes submission of form SS-4 to obtain an EIN for a non US business.
- The authorization also allows any non US based individual, firm, or organization to designate an appointee, who can receive or inspect your confidential tax information from the IRS pertaining to the type of tax and periods listed on Form 8821-Tax Information Authorization.
It is important to note that the authority of a third party designee is valid only for a “newly” assigned EIN for non US business.
How does IncParadise help you?
IncParadise is one of the top business incorporation and registered agents in the US. We are focused at providing a range of different business related services that have been created to ensure all your business requirements are fulfilled. We have a team of experienced professionals in place to help you with any query you may have not only on EIN for non US businesses but also other processes related to business formation in any of the 50 states. Our services cover all company needs from new business incorporation to maintaining daily businesses routine, helping with state filings, Foreign Qualification, Reinstatements, and providing virtual address and mail forwarding services among others.