Non-U.S. residents can use their ITIN to apply for an EIN and start their business legally.
If you are starting a business or working as a freelancer, you may have heard of an Employer Identification Number (EIN). But what if you only have an Individual Taxpayer Identification Number (ITIN)? Can you still get an EIN?
In this article, we are going to explore that question, explain what an EIN and an ITIN are, and take you through the steps to get an EIN.
What is an EIN?
An Employer Identification Number (EIN) is often called a Federal Tax Identification Number. It is a unique nine-digit number assigned by the IRS to identify a business entity.
Just like a Social Security Number is important for individuals, an EIN is important for businesses.
Why Do You Need an EIN?
You may need an EIN for several reasons:
Hiring Employees: If you are going to hire employees, you will need an EIN to report taxes.
Operating as a Corporation or Partnership: Businesses that are structured as corporations or partnerships require an EIN for tax purposes.
Opening a Business Bank Account: Most banks require an EIN to open a business account.
Paying Certain Taxes: If you have to pay sales tax, excise tax, or federal taxes, you need an EIN.
What is an ITIN?
An ITIN is an IRS-assigned tax processing number issued to eligible individuals who are not eligible to obtain a Social Security Number but are required to comply with U.S. tax laws. These may include non-resident aliens, their spouses, and dependents. While an EIN is used for business purposes, an ITIN is used mainly for personal tax purposes.
Main Differences Between EIN and ITIN
Purposes: EIN is for companies; ITIN is for tax filers or individuals.
For Whom can it be availed? Every business, for instance sole-proprietor, can obtain a number EIN. An individual who is foreign and has a Social Security number can apply and get an ITIN.
Are you eligible for an EIN with an ITIN
Yes, you can get an EIN if you have an ITIN! However, having an ITIN doesn’t bar you from getting an EIN. You will simply need to meet some requirements while applying for it.
Important Tips Before Applying for an EIN
Here are a few things you should know before applying for an EIN:
Know Your Business Structure: Decide if you will register as a sole proprietorship, partnership, LLC, or corporation. This determines what kind of EIN you will need.
Organize Your Documents: Collect all the documents that you will require, such as your ITIN, business name, and business address.
Understand Your Responsibilities: With an EIN, you will have necessary tax responsibilities. You are prepared to file tax returns and follow any local, state, or federal regulations.
How to Get an EIN
Now that you know what an EIN is and that you can get an EIN if you have an ITIN, let’s find out how to apply for one. The procedure is simple!
Step 1: Check Your Eligibility
In order to request an EIN, you must be qualified by these criteria:
- Your primary business is situated within the United States or United States territories.
- You have a valid Taxpayer Identification Number-for example, you have an ITIN.
Step 2: Select an Application Method
Apply for an EIN using one of the following methods:
- Online: This is the quickest and easiest way to get an EIN. You will receive your EIN immediately!
- By Mail: Complete IRS Form SS-4 and mail it to the right address. The time to process may take four weeks.
- By Fax: If you prefer, you can apply by fax. The processing time takes about four business days.
- By Phone: This is the only option for international applicants who cannot apply online. You will need to call the IRS to complete your application.
Step 3: Fill Out Form SS-4
Regardless of how you are applying, you will need to fill out Form SS-4. This form gathers essential information about your business.
Some key sections of the form include:
- Legal Structure: Identify whether your business is a sole proprietorship, partnership, corporation, etc.
- Responsible Party’s Information: You will need to include your name and ITIN as the responsible party.
- Business Name and Address: You will need to include your business’s legal name and address.
Step 4: Submit Your Application
- Online: If you are applying online, you will simply follow the instructions on the IRS website and submit your application.
- By Mail or Fax: If you are submitting by mail or fax, make sure you have signed your form before sending it in.
- Wait for Processing: If you applied online, you will receive your EIN immediately. In case you have applied through the mail or by fax, then it will take some time.
What Do I Do Once I Have My EIN?
Now that you have your EIN, here’s what you do:
- Save It: You can store it somewhere safe to use in the future.
- Use It: Start using it to open your business’s bank accounts, hiring employees, and filing tax returns.
- Comply with Tax Regulations: Be sure to follow all IRS guidelines concerning your tax obligations.
Common Misconceptions About EINs and ITINs
Many people confuse EINs and ITINs or think one can substitute for the other. It’s important to understand that:
- An EIN is essential for business operations and tax obligations.
- An ITIN cannot be used in place of an EIN for business purposes.
This knowledge helps you make good choices for the future of your business.
Conclusion
In conclusion, yes you can definitely get an EIN when only possessing an ITIN. It’s as straightforward and swift to fill in the information using an online platform or alternative service. It does come with important uses once starting up or even expanding an already established company here in the States. And hence, setting a successful tone by acquiring the correct one first off.
FAQs
1. How long does it take for one to get an EIN?
If applied online, then within hours, one can receive his or her EIN. It takes about four weeks if applied by mail, and four business days if one applies by fax.
2. Do I need an EIN if I am a sole proprietor?
Yes, it is usually advisable to have an EIN, especially if you are going to hire employees or need to separate your personal and business finances.
3. Am I eligible for an EIN even if my business is still non-existent?
Apply for the EIN when your business form has been put into place because having this prior ensures that accurate information is available and provided upon filling out an EIN.