If you’re an aspiring entrepreneur, you’re probably asking yourself, “What are SSN, EIN, or ITIN, and do I need them?”
Although these acronyms may seem complicated, they are essential to your business journey.
You may approach this procedure with greater confidence if you understand their respective roles, each of which is important. Particularly if you’ve chosen to handle everything solo.
Long story short: they are all tax numbers. SSN and ITIN identify an individual. EIN identifies a company.
SSN, EIN, and ITIN: The basics
What is an SSN?
An SSN, or Social Security Number, is a nine-digit number issued by the U.S. Social Security Administration.
In addition to being widely used as an identifying number for tax and employment purposes, it is primarily used to monitor persons for Social Security purposes.
Opening bank accounts, submitting loan applications, and doing other financial tasks are frequently necessary for business owners planning to start a remote company.
For identity purposes relating to their businesses, non-residents of the United States can often rely on an ITIN or EIN.
What is an EIN?
The Internal Revenue Service (IRS) assigns a unique nine-digit number known as an Employer Identification Number (EIN) to identify a company organization for tax purposes.
Consider it your company’s Social Security number. An EIN is required for foreign nationals wishing to launch a remote business in the United States.
Getting one is not too difficult; you can even apply online via the IRS website.
Having an EIN guarantees that your firm is accepted by the US government for tax purposes and streamlines a lot of business procedures.
What is an ITIN?
For those who must file taxes but are not qualified for a Social Security number, the IRS issues an ITIN, or Individual Taxpayer Identification Number.
ITINs are nine-digit numbers that are structured like SSNs and always start with the number 9. For example, 9XX-XX-XXXX.
To comply with U.S. tax rules, you may require an ITIN if you’re a non-resident of the country and don’t have an SSN. This is especially crucial if you get money from a U.S. source.
You must fill out IRS Form W-7 and provide supporting evidence proving your identification and foreign status in order to obtain an ITIN.
You may submit tax returns, get tax refunds, and fulfill other federal tax duties with an ITIN after it has been granted.
Why You Need an SSN, EIN, or ITIN
Legal Requirements for Non-US Residents
For non-U.S. residents looking to start a business in the U.S., understanding the legal requirements for identification numbers is a very important part of the process.
To register an LLC, submit taxes, and open a business bank account, you will require an EIN. While it is not necessary to have an SSN in order to create a business, having one might be useful when applying for personal credit or creating bank accounts. An ITIN can be used as your tax identification number if you are not eligible for an SSN.
Non-residents of the United States must have the proper identification numbers in order to abide by IRS requirements and prevent fines and legal issues.
Obtaining an ITIN requires completing Form W-7 along with verification of identification and foreign status, whereas obtaining an EIN is simple and may be completed online.
The proper functioning and legal status of your remote business located in the United States depends on these IDs.
Benefits of Having These Identifiers
There are several benefits associated with having an SSN, EIN, or ITIN that may simplify business operations and enhance your financial reputation.
You may manage the finances of your firm and keep personal and business costs separate with an EIN, which makes it simple to create a corporate bank account. It also enables you to file business licensing applications, recruit staff, and pay your state and federal taxes. Tax treaty advantages and tax return filing are made possible for non-resident Americans using an ITIN.
Since these identifiers are frequently needed for financing applications, possessing them can also help you stand out to lenders and investors.
These numbers are necessary for conducting business in the United States in an orderly and lawful manner, even if you do not intend to reside there. All things considered, they offer a strong platform for your company to expand and thrive in the US market.
Consequences of Not Having Them
If a non-resident individual wants to launch a business in the United States, they may encounter several difficulties if they fail to get an SSN, EIN, or ITIN.
You won’t be able to create a business bank account, register your LLC, or file the required tax returns without an EIN. Penalties both financial and legal, such as fines from the IRS for non-compliance, may follow from this.
Additionally, without these identifiers, you’ll face difficulties in hiring employees, applying for business licenses, and securing loans or investments. If you don’t have an ITIN when required, you may not be able to fulfill your tax obligations, leading to potential audits and additional penalties.
How to Apply for Each Identifier
Applying for an SSN
Only eligible non-citizens and U.S. citizens are allowed to apply for an SSN.
If you meet the requirements and are a non-resident of the United States, you must complete Form SS-5, Application for Social Security Card. This form is available through the Social Security Administration (SSA) website or the SSA location that is closest to you.
You must submit the form with authentic documentation verifying your identity, age, and immigration status with the ability to work.
Steps to Obtain an EIN
You can file for an EIN by yourself. It would be best if you did the following:
- Fill out an SS-4 form
- Send it by post mail or by fax to the IRS
- Wait 2-5 weeks for approval
If you send it by mail, send it to the following address:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, Ohio 45999
If you send it by fax, send it to 304-707-9471.
And then you wait for 2-5 weeks.
If you have an SSN or ITIN number, you can get it the same day over the phone. But, SSN or ITIN is not necessary to obtain the EIN. They can just make the process go faster.
You can call the IRS on the phone and ask them for the number in a few weeks if you receive no response. There is a waiting line that often takes up to 2 hours. Eventually, you’ll get the number. But, you have to wait in line.
If you file for an EIN by yourself, you’re getting it for free. There is no filing fee for the EIN.
Getting an ITIN
Fill out IRS Form W-7, Application for an IRS Individual Taxpayer Identification Number, in order to obtain an ITIN.
Your name, international address, and U.S. address (if applicable) must be entered into this form.
You must provide original documentation, such as a passport or national identification card, or certified copies from the issuing body to verify your identity and foreign status in addition to the form.
You can also mail your completed form and documents to the IRS, or you can apply in person at an IRS Taxpayer Assistance Center or through an IRS-authorized Certifying Acceptance Agent.
The processing time for ITIN applications is typically 7 to 11 weeks. Once approved, you’ll receive your ITIN by mail, which you can then use for tax filing and other purposes related to your business operations in the U.S.
Common Challenges and Solutions
Overcoming Application Hurdles
There might be additional difficulties involved in applying for an SSN, EIN, or ITIN, especially for non-residents of the United States. The learning curve associated with paperwork and comprehending the particular documentation needs is a frequent obstacle.
To get around this, make sure you have all the required paperwork before submitting your application and carefully read the guidelines that the IRS or SSA have supplied.
If you’re applying for an ITIN, you may reduce processing time by providing correct and comprehensive supporting evidence and, if needed, following up with the IRS. Use the online application tool to get an EIN for expedited processing.
You may greatly lessen the possibility of running into problems throughout the application process by planning ahead and getting expert assistance when necessary.
Expert Tips and Resources
Professional Help and Services
It can be difficult to navigate the requirements for getting an SSN, EIN, or ITIN, particularly for non-residents of the United States. Getting expert assistance might greatly streamline the procedure. Business consultants and tax advisers with experience in foreign applications may offer insightful advice on the precise documents and regulations that are required.
They can assist you in precisely completing forms, get the required paperwork, and even speak on your behalf when corresponding with the IRS or SSA.
Furthermore, a plethora of internet resources are available to aid with ITIN and EIN applications; these services frequently give step-by-step instructions and customer support. These services are not free, but they can save you time and lower the possibility of mistakes that could result in delays or rejections.
Feel free to check out some of the comparison articles that we created, and learn more about the Neubase process and packages.
Neubase process
We start the process by filling out a form on the Neubase website. You just have to click ‘Get started’, and our team will do the rest.
Conclusion
Any aspiring entrepreneur must be aware of the distinctions between an SSN, EIN, and ITIN, particularly if they want to do business as a non-resident in the United States.
Such identifying numbers are essential for banking operations, business registration, and tax compliance. Having the appropriate identity may simplify your company processes and assist in preventing expensive legal issues, whether you require an ITIN to satisfy tax responsibilities, an EIN for corporate use, or an SSN for personal credit.
Your company is better positioned for development and compliance in the U.S. market by obtaining the right number.
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