When starting a new business, you will come across certain actions which require an EIN, or an employer identification number. These are often required by government agencies, banks, payment processors, business licensing, and other typical business necessities. The EIN is issued by the IRS and serves to identify your business and business owners to the IRS for tax purposes. Like a social security number, that purpose has now broadened outside of the IRS as the private sector has adopted using it as an identifier as well.

You will probably need an EIN soon after you incorporate your business entity. To apply for an EIN is as simple as applying online at the IRS website HERE. This can be done by US citizens or permanent residents within the US. For non-US citizens and those residing outside of the US when they apply, a paper application will have to be submitted to the correct office.

You will definitely need an EIN when you begin to hire employees, designate your entity to be taxed as a C-corporation, partnership, or LLC, filing any special good taxes (employment, excise, import, alcohol, etc.), or it your business if involved with trusts, employee retirement accounts, non-profits, etc. These are broad strokes but generally your business will need an EIN at some point as you are starting up or expanding.

You should not apply for a new EIN if your business name changes, you declare bankruptcy, elect taxation as an S-corp, or the address of your business changes. Applying for a new EIN under these circumstances will cause the IRS records to show you owning 2 entities and complicate your taxes until remedied.

An ITIN is also a number issued by the IRS for taxation identification purposes. An ITIN is an individual tax identification number. It is primarily used by non-US citizens (who do not have a social security number) who are required to remit US taxes. An ITIN will be required for non-US citizens who start a US based business and secure an EIN for their business. While the business EIN will allow the business to pay taxes, the ITIN will allow the owner of the business to properly pay their personal income taxes from the business.

Typically an ITIN will also be required for a non-US citizen opening a bank account, securing a driver’s license, or even proof of residency. But note that an ITIN itself is not proof of legal status or work authorization. Applying for an ITIN can be relatively straightforward for applicants residing in the US with the submission of the required paperwork to the appropriate IRS office. For those applicants outside of the US, there can be significant delays due to the amount of paperwork required. It is often recommend to find the nearest IRS Acceptance Agent to help guide you through the process and expedite the ITIN filings for you.

As your business expands call Reidel Law Firm today to explore way to protect your business and grow. Call Reidel Law Firm at +1(832)510-3292 or use the email button below.