Are you a non-resident entrepreneur planning to start or expand your business operations in the United States? Understanding the Employer Identification Number (EIN) and how to obtain one is essential.
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities operating in the U.S. It acts as your business’s Social Security number for tax purposes and is required for almost all business-related activities.
For non-resident entrepreneurs, an EIN is critical to conducting legitimate business in the U.S. Without it, you cannot open business bank accounts, hire employees, or file tax returns. The EIN is free to obtain directly from the IRS.
What Does EIN Mean for Non-Residents?
An Employer Identification Number (EIN) functions much like a Social Security number, but for your business rather than for an individual. It uniquely identifies your company to the Internal Revenue Service (IRS) as well as other U.S. federal agencies, serving as a tax identification number used for reporting and compliance purposes. Nearly every business entity operating in the United States, regardless of its legal structure, is required to have an EIN to conduct its operations lawfully. For non-resident Indian entrepreneurs, obtaining an EIN is absolutely essential as it enables several critical business activities.
With an EIN, you can open business bank accounts in the U.S., which is necessary for separating your personal and business finances. You can legally hire and manage employees, fulfill federal and state tax obligations by filing returns on behalf of your company, and establish your business’s credibility when dealing with clients, suppliers, and partners within the U.S. Furthermore, an EIN allows you to accept payments and enter into contracts, which are foundational for conducting business.
Without an EIN, your ability to perform these vital activities would be severely restricted, and your business would not be compliant with U.S. laws, potentially putting your operations at risk.
Who Needs an EIN?
You need an EIN if you operate any U.S.-based business entity or plan to do so. This includes:
- Sole proprietorships with employees or excise tax requirements
- Partnerships, corporations, and LLCs
- Foreign-owned entities conducting business or holding assets in the U.S.
- Trusts, estates, and certain non-profit organizations
Remember, the EIN authorizes your business to meet tax and regulatory requirements, so even if you don’t have employees initially, you may still need an EIN.
How Can Non-Residents Apply for an EIN?
Non-residents cannot apply for an EIN through the IRS’s online system, but they have three accessible methods:
- By Phone: Call the IRS at +1-267-941-1099 during weekday business hours (Eastern Time). The authorized individual can complete the application during the call, making this the fastest method.
- By Fax: Complete Form SS-4 and fax it to the appropriate IRS number (855-215-1627 for the U.S., 304-707-9471 internationally). If you provide a fax number for a response, you typically get your EIN within four business days.
- By Mail: Mail your completed Form SS-4 to the IRS address for International Operations. This is the slowest method and may take up to four weeks.
Common Challenges and Tips for NRIs
Many non-resident entrepreneurs face hurdles during the EIN application, such as:
- Not having a U.S. Social Security Number or ITIN
- No U.S. physical address for business registration
- Timezone differences causing difficulty in phone communication
- Language barriers or confusion with IRS forms
Solutions include hiring a U.S.-based agent to represent your company, using virtual addresses where permitted, and seeking professional assistance to avoid mistakes and delays.
What to Do After Receiving Your EIN?
Once you have your EIN, you can immediately begin:
- Opening U.S. business bank accounts
- Applying for necessary licenses and permits
- Filing paper tax returns
Note that some functions like electronic filing and tax deposits may require a waiting period of up to two weeks after you receive your EIN.
Keep your EIN information up to date by filing Form 8822-B if your business address or responsible party changes.
Tax Responsibilities for Businesses With an EIN
Having an EIN means you must handle:
- Annual federal and state income tax filings
- Employment taxes if you hire workers within the U.S.
- Excise or other industry-specific taxes if applicable
Ensure that you use your EIN consistently for all tax-related correspondence and filings.
Conclusion
Getting your EIN is essential for any non-resident entrepreneur planning to do business in the United States. This nine-digit number serves as your business's official identity and enables you to open bank accounts, file taxes, and operate legally in the U.S. market.
The application process is free and straightforward. You can apply by phone, fax, or mail using Form SS-4. Remember to double-check all information before submitting to avoid delays. Most EIN functions are available immediately after approval, though some electronic services require a brief waiting period.
Once you have your EIN, keep your business information current with the IRS. Report any changes to your responsible party or business address within the required timeframes. Your EIN will be necessary for all tax filings and business transactions in the United States.
Frequently Asked Questions
Q1. Can non-resident entrepreneurs obtain an EIN for their U.S. business?
Yes, non-resident entrepreneurs can absolutely obtain an Employer Identification Number (EIN) to operate legally in the United States. While they cannot apply via the IRS’s online system (which is reserved for entities with a U.S. address), international applicants can still apply by phone, fax, or mail by submitting the required Form SS-4. The IRS provides dedicated phone lines for international applicants to conveniently process these requests.
Q2. Why is having an EIN important for non-resident business owners?
An EIN is vital because it formally identifies your business to the IRS and other financial institutions. It allows you to open business bank accounts in the U.S., hire and pay employees legally, file federal and state tax returns, and build credibility and trust with U.S. clients, suppliers, and partners. Without it, many essential business operations would be restricted or impossible, potentially resulting in non-compliance with U.S. laws.
Q3. How soon can I start using my EIN after receiving it?
In most cases, you can begin using your EIN immediately after the IRS issues it. This enables activities like opening bank accounts and submitting paper tax returns. However, certain electronic functions,such as e-filing tax returns or making electronic tax deposits may require a waiting period of up to two weeks to activate due to system processing times.
Q4. What tax responsibilities do non-resident entrepreneurs have once they have an EIN?
With an EIN, you must fulfill all applicable tax filing obligations related to your business structure. This includes filing annual federal and state income tax returns, handling employment taxes if you have U.S.-based employees, and paying any relevant excise or other industry-specific taxes. It is also important to use your EIN consistently on all IRS correspondence and tax filings to maintain compliance and avoid legal complications.
