How to Get an ITIN for Business Taxes and Compliance

Key Takeaways

• An ITIN (Individual Taxpayer Identification Number) is issued by the IRS for individuals who need to file taxes but are not eligible for an SSN.
• Foreign business owners do not need an ITIN to start a business in the U.S. but may need it for tax purposes.
• An EIN (Employer Identification Number) is required to operate a business in the U.S. and serves as the business’s tax ID.
• ITINs are used for tax reporting and do not grant work authorization or legal immigration status.
• Obtaining an ITIN requires IRS Form W-7, proof of identity, and a federal tax return (unless meeting an exception).
• Applicants can apply for an ITIN through mail, IRS offices, or IRS-authorized Acceptance Agents.
• An ITIN does not replace an EIN, and business owners may need both depending on their situation.
• ITINs must be renewed if they expire before tax filing.
• Alternative tax identification options include SSNs for U.S. citizens and permanent residents, and EINs for businesses.

How to get a ITIN number for business? An Individual Taxpayer Identification Number (ITIN) is a specific tax processing number that is distributed by the Internal Revenue Service (IRS). An ITIN has nine digits, always begins with the number 9, and has a 7 or an 8 as the fourth digit (e.g., 9XX-7X-XXXX). In order to obtain an ITIN number, an applicant must complete IRS Form W-7, the application for Individual Taxpayer Identification Number.

Tax ID Numbers (TIN)

The United States requires any foreign investor who wants to form a business in the country to obtain a Tax ID number. The IRS issues these identification numbers in accordance with tax law for specific tax purposes. Individual taxpayers who have an obligation to file a tax return are granted a Social Security Number (SSN). Legal immigrants can apply for a SSN when completing the immigrant visa application with the United States State Department. If you complete both of these applications, a visit to the Social Security office may not be needed upon arrival into the United States.

It is also an option to visit the Social Security office to apply for a SSN once you arrive into the United States. In the event that an individual is not eligible for a SSN, the IRS will use an ITIN to identify non-resident aliens and foreign nationals who must report federal taxes. Specifically, ITIN numbers are granted to non-citizens who are employed in the United States and must file taxes. However, if those individuals would like to open a business in the United States, an ITIN number is not required.

The IRS will only issue an ITIN to the following individuals:

• Those who do not have a valid SSN.
• United States resident aliens who must file taxes, and their spouses.
• Foreign nationals who must file taxes.

Who Needs an ITIN?

An Individual Taxpayer Identification Number (ITIN) is designed for individuals who are not eligible for a Social Security Number (SSN) but still need to file federal taxes. The IRS issues ITINs to ensure tax compliance among non-resident aliens, foreign nationals, and certain dependents or spouses who have U.S. tax obligations.

Common reasons why someone needs an ITIN include:

• Filing a U.S. federal tax return as a non-resident or resident alien.
• Being a foreign spouse or dependent of a U.S. citizen or resident alien.
• Being a foreign individual claiming tax treaty benefits.
• Being a foreign national investor or business owner who earns income in the U.S.

However, an ITIN is not a business tax ID and does not grant work authorization or U.S. residency.

Employer Identification Number (EIN)

An Employer Identification Number (EIN) has nine digits. It is sometimes referred to as a Federal Tax Identification Number. The IRS issues an EIN in order to identify a business. Consider that an EIN is like a SSN for your business. In order to lawfully operate a company in the United States, an EIN is required.

It is mandatory for the following entities to obtain an EIN number in order to operate:

• Governmental agencies.
• Limited liability companies.
• NGOs.
• Partnerships.
• Corporations.
• Sole proprietorships.
• Trusts.

There are specific requirements that individuals must meet in order to qualify for an EIN number. They include:

• Operating a partnership, corporation, or a sole proprietorship.
• Compensating your employees up to $600 or more.
• Holding wages and other income tax for non-residents.
• Operating a non-profit organization.
• Holding a tax-deferred pension plan.
• Filing taxes for alcohol, tobacco, firearms, excise, and employment.
• Working with estates, trusts, farmers' cooperatives, and real estate mortgage investments.

How to Apply for an ITIN

If you need an ITIN for tax purposes, you must complete IRS Form W-7 (Application for IRS Individual Taxpayer Identification Number) and submit it with the required documents.

Steps to apply for an ITIN:

1. Fill out Form W-7 – The form requires your personal details, reason for applying, and tax identification information.
2. Provide proof of identity and foreign status – A valid passport (the only stand-alone document accepted) or a combination of two other identity documents (such as a birth certificate, national ID, or visa).
3. Include a federal tax return – Most applicants must submit their first tax return alongside their Form W-7 unless they qualify for an exemption (e.g., certain foreign investors, scholarship recipients).
4. Submit the application – ITIN applications can be submitted:
   • By mail to the IRS at the designated ITIN processing center.
   • Through an IRS-authorized Acceptance Agent who can verify identity and submit the application.
   • In person at an IRS Taxpayer Assistance Center (appointment required).
5. Wait for processing – The IRS typically processes ITIN applications within 7 weeks, but processing times may be longer during peak tax season.

How to Open a Business in the United States Without an ITIN Number

There is a misconception that in order to form a business in the United States an ITIN is required. This is why there are often many questions from foreign business owners asking how to open a company without having an ITIN number. It is important to remember that in order to establish a company in the United States an EIN must be obtained, not an ITIN number

To clarify, businesses use EINs and not ITINS. However, if you are a resident alien or a foreign national without an SSN and must file taxes, and you are planning on starting a sole proprietorship or a single-member limited liability company (LLC), you will require an ITIN in order to complete the company's taxes. An EIN will still also be needed.

In order to form a corporation in the United States, you do not have to be a citizen. An individual who is not a citizen looking to start a business can easily obtain an employer identification number as long as three criteria are met:

• The company is based in the United States.
• The individual wanting to formulate the business has been granted an ITIN.
• Only one employer identification number is needed per day.

If you are not a citizen of the United States, you do not need a SSN or ITIN in order to obtain an EIN.

ITIN vs. EIN vs. SSN: What’s the Difference?

Many people confuse an ITIN, EIN, and SSN, but they serve different purposes:

Key Points to Remember:

• Business owners need an EIN, not an ITIN, to operate legally in the U.S.
• If you're a sole proprietor or single-member LLC and are required to file taxes but don’t qualify for an SSN, you may need an ITIN in addition to an EIN.
• ITINs do not grant work authorization, and they do not replace an SSN.
• Unlike SSNs, ITINs must be renewed if they expire before tax filing.

Frequently Asked Questions 

1. Can I get an ITIN without a tax return?
   Yes, but only if you qualify for an exception, such as being a non-resident investor or scholarship recipient.
2. How long does it take to get an ITIN?
   It usually takes 7 to 11 weeks for the IRS to process an ITIN application, but it may take longer during peak tax seasons.
3. Can I use an ITIN to open a business bank account?
   No, most banks require an EIN or SSN to open a business account, not an ITIN.
4. Do I need an ITIN to start a business in the U.S.?
   No, you do not need an ITIN to start a business, but you may need one to file business taxes if you do not have an SSN.
5. How do I renew my ITIN?
   If your ITIN expires, you must submit Form W-7 with updated identification documents before filing your next tax return.

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