An EIN identifies your U.S. company for federal tax purposes. An ITIN identifies you as an individual when you have a U.S. federal tax purpose but are not eligible for a Social Security Number. Most foreign founders need an EIN for their company, and you do not necessarily need an ITIN to get one.
If you are a foreign founder setting up a company in the United States, you have probably heard the terms EIN and ITIN come up early in the process. They sound similar, and both are issued by the IRS, but they are not interchangeable.
The simple distinction is this: an EIN identifies your business, while an ITIN identifies you as an individual for U.S. federal tax purposes. Here is what foreign founders should know.
What is an EIN?
An Employer Identification Number (EIN) is a nine-digit federal tax identification number that the IRS assigns to a business or other entity. Despite the word “Employer” in the name, you do not need employees to need an EIN. Your U.S. company may use its EIN for federal tax filings, payroll and other reporting obligations, and it becomes one of the main identification numbers connected to the entity.
Your EIN belongs to the company, not to you personally.
For a foreign founder creating a U.S. corporation, partnership or certain other entities, obtaining an EIN is usually one of the first steps after forming the company.
What is an ITIN?
An Individual Taxpayer Identification Number (ITIN) works differently. It is issued to individuals who have a U.S. federal tax purpose but are not eligible for a Social Security Number (SSN). For example, a foreign founder may need an ITIN if they are required to file a U.S. individual income tax return but cannot obtain an SSN.
A small but important detail: an ITIN is only a tax-processing number. It does not:
- Give you permission to work in the U.S.
- Change your immigration status
- Qualify you for Social Security benefits
- Serve as general identification outside the federal tax system
So having a U.S. company does not automatically mean you need an ITIN.
Do you need an ITIN to get an EIN?
This is probably the most common question we hear from foreign founders, and the answer is: not necessarily.
When you apply for an EIN, the IRS asks you to identify the company’s responsible party. Generally, this is the individual who ultimately owns or controls the entity. Normally, the responsible party’s SSN or ITIN is entered on Form SS-4. However, if the responsible party does not have and is not eligible to obtain an SSN or ITIN, the IRS instructions allow you to enter “foreign” or “N/A” on line 7b instead.
So you should not assume that you need to apply for an ITIN simply because you are trying to obtain an EIN for your U.S. company. The two applications serve separate purposes.
EIN vs. ITIN: what’s the difference?
| EIN | ITIN | |
|---|---|---|
| Used by | A business or entity | An individual |
| Purpose | Business federal tax identification | Individual federal tax identification |
| Application | Form SS-4 | Form W-7 |
| Replaces an SSN? | No | Used for federal tax purposes when you are not eligible for an SSN |
| Provides work authorization? | No | No |
A foreign founder may therefore have:
- An EIN only
- An EIN and an ITIN
- Or, depending on the circumstances, an EIN while personally using an SSN instead of an ITIN
It all depends on the company’s structure and the founder’s individual U.S. tax situation.
How do foreign founders apply for an EIN?
There are several ways to apply, and which one is available depends on your situation:
- Online: the IRS online EIN application can be used when the entity’s principal place of business is in the U.S. or a U.S. territory and the application meets the IRS requirements, including having the responsible party’s SSN or ITIN. If approved through the online system, the EIN can generally be issued immediately.
- By phone, fax or mail: if your principal place of business is outside the United States, you cannot use the IRS online application. International applicants apply by phone, fax or mail instead.
A friendly tip: make sure the information on the EIN application is consistent with your company’s formation documents. Pay particular attention to:
- The company’s exact legal name
- Entity type
- Formation date
- Responsible party
- Business address
- Reason for applying
Small inconsistencies at the beginning can create bigger administrative headaches later.
When does a foreign founder need an ITIN?
An ITIN becomes relevant when you personally have a U.S. federal tax purpose and are not eligible for an SSN. A common example is a nonresident founder who is required to file a U.S. individual federal income tax return. There may also be situations involving treaty benefits or other federal tax reporting requirements where an ITIN is needed.
The key point is that the need for an ITIN comes from the individual’s tax situation, not simply from owning shares in a U.S. company. Before submitting an application, confirm that you actually have a qualifying federal tax purpose. Our private client tax team can help you check.
How do you apply for an ITIN?
To apply for an ITIN, you generally complete Form W-7, Application for IRS Individual Taxpayer Identification Number. In most cases, the application package includes:
- Form W-7
- A U.S. federal income tax return
- Supporting documents proving your identity and foreign status
Certain exceptions allow an ITIN application without attaching a federal income tax return. You can submit the application by mail, or apply in person through certain IRS Taxpayer Assistance Centers or an IRS-authorized Acceptance Agent or Certifying Acceptance Agent.
One thing to plan around: ITIN applications are not immediate. The IRS currently advises allowing approximately seven weeks for an update, which can increase to nine to eleven weeks during tax season or when applying from overseas. If an ITIN will be required for an upcoming tax filing, do not leave the application until the last minute.
Common mistakes to avoid
EIN and ITIN applications are relatively straightforward, but foreign ownership can add another layer of complexity. Here are a few things to watch for:
- Applying for an ITIN when you do not actually need one. Owning a U.S. company does not by itself mean you need an ITIN.
- Assuming an ITIN is required before an EIN. If the foreign responsible party does not have and is not eligible for an SSN or ITIN, the Form SS-4 instructions provide another option.
- Listing the wrong responsible party. The responsible party should generally be the individual who ultimately owns or controls the entity.
- Waiting until a tax deadline to think about an ITIN. Processing can take several weeks, especially for applications submitted internationally.
- Treating the EIN application as an isolated task. Your entity structure, tax classification, ownership and filing obligations should all be considered together.
Two questions that settle it
These two questions usually make the distinction much clearer:
- Does your U.S. business need a federal tax identification number? You are probably looking at an EIN.
- Do you personally have a U.S. federal tax purpose and are not eligible for an SSN? You may need an ITIN.
And yes, depending on your situation, you may eventually need both. The important part is understanding why you are applying for each number before starting the process.
The bottom line
For foreign founders, EINs and ITINs are often part of a much bigger U.S. setup. The EIN is tied to the business. The ITIN is tied to the individual. And having one does not automatically mean you need the other. Getting that distinction right from the beginning can make your U.S. tax registrations and future filings much easier to manage.
If you are unsure which identification number applies to you, Orbiss can help. We work with international founders and companies on U.S. entity setup, tax, accounting and ongoing compliance, so you can focus on growing your U.S. business rather than getting lost in the paperwork.
Frequently asked questions
Do foreign founders need an ITIN to get an EIN?
Not necessarily. If the company’s responsible party does not have and is not eligible to obtain an SSN or ITIN, the IRS instructions for Form SS-4 allow you to enter “foreign” or “N/A” on line 7b instead.
Can I apply for an EIN online if my company is based outside the U.S.?
No. The IRS online application is only available when the entity’s principal place of business is in the U.S. or a U.S. territory. International applicants can apply by phone, fax or mail.
Does an ITIN allow me to work in the United States?
No. An ITIN is only a tax-processing number. It does not give you permission to work in the U.S., change your immigration status or qualify you for Social Security benefits.
How long does it take to get an ITIN?
The IRS currently advises allowing approximately seven weeks, or nine to eleven weeks during tax season or when applying from overseas.
Does owning a U.S. company mean I need an ITIN?
No. The need for an ITIN comes from your personal U.S. federal tax situation, such as being required to file a U.S. individual income tax return, not from owning shares in a U.S. company.
This article is for general informational purposes only and does not constitute legal, tax, or accounting advice. Rules and requirements vary by company, individual, and jurisdiction, and can change. Please seek advice appropriate to your specific situation.