What is an EIN and Why is it Important?
An Employer Identification Number (EIN) is a nine-digit number assigned by the Internal Revenue Service (IRS) to identify businesses for tax purposes.
Why it is important:
- Functions like a Social Security Number (SSN) for businesses
- Required for federal tax filings
- Needed for hiring employees legally
- Essential for opening a U.S. business bank account
- Often required for state licenses and business permits
Who Needs a US EIN?
You are required to obtain an EIN if:
- You have formed an LLC, corporation, or partnership in the U.S.
- You intend to hire employees in the U.S.
- You need to open a U.S. business bank account
- Your business is subject to federal taxes
- You are a foreign company conducting business in the U.S.
Even non-U.S. residents without a Social Security Number (SSN) can apply for an EIN.
How to Get a US EIN After Incorporation
- Determine Eligibility: You must have a valid reason for applying (e.g., starting a new business). Both U.S. citizens and foreign entities are eligible.
- Complete Form SS-4: Download from the official IRS website and fill in company details, business structure, and responsible party’s information.
- Submit the Application:
| Method | Who Can Use | Processing Time | SSN/ITIN Required |
| Online | U.S. residents only | Immediate (Mon–Fri, 7 a.m.–10 p.m. ET) | Yes |
| Fax | U.S. & foreign applicants | About 4 business days | No |
| U.S. & foreign applicants | About 4–6 weeks | No | |
| Phone | Foreign applicants only | Same day (Call +1-267-941-1099) | No |
Note: Only U.S.-based applicants can use the online method. Foreign applicants must use fax, mail, or phone.
- Receive Your EIN: Upon successful application, the IRS issues a confirmation letter (Form CP 575). This document serves as official EIN proof.
What Documents Are Required?
- Completed Form SS-4
- U.S. company incorporation documents
- Passport copy of the responsible party (for foreign entities)
- Authorization letter (if a third party is applying on your behalf)
What are the Benefits of Getting a US EIN?
- File federal and state taxes: Helps your business stay compliant with tax rules.
- Open a US business bank account: Makes managing your company’s money easier.
- Hire employees legally: Required to report payroll taxes for your staff.
- Build business credit: Helps establish your company’s credit history in the US.
- Apply for licenses and permits: Often needed when getting official business approvals.
- Meet IRS and state regulations: Ensures your business follows legal requirements.
- Build vendor relationships: Needed to work smoothly with suppliers and partners.
- Access payment platforms: Required by services like Stripe, PayPal, and Amazon to accept payments.
What are the Challenges in Applying for an EIN?
- IRS support hours may be inconvenient for applicants in different time zones
- Form SS-4 can be confusing if not familiar with U.S. tax terminology
- Foreigners cannot apply online
- Processing may take longer if submitted by mail
- Language barriers may affect communication with the IRS
- Errors in Form SS-4 may delay or void the application
- Lack of SSN/ITIN may require phone/fax application
- Some cases require additional IRS clarification
When Should You Apply for an EIN?
You should apply for an EIN immediately after incorporation, especially if:
- You want to open a business bank account
- You plan to start hiring employees
- You are registering for licenses or state tax accounts
- You’re setting up online payment processors
What if You Don’t Get an EIN?
| Issue | Impact |
| No U.S. bank account | Cannot perform financial transactions in the U.S. |
| No federal tax ID | Non-compliance with IRS regulations |
| Cannot hire employees | Limits business operations |
| Blocked from platforms | Stripe, PayPal, and others may deny access |
| Filing delays | Risk of penalties or audits |
| Vendor rejections | Cannot establish corporate partnerships |
Can Foreigners Apply for a US EIN?
Yes. Foreign individuals and companies can apply even without a U.S. address or SSN.
What’s required:
- U.S. business formation (e.g., in Delaware, Wyoming)
- Completed Form SS-4
- Mention “Foreign” on the form if you don’t have an SSN
- Submit via fax or phone
Real-Life Example
A SaaS startup based in India forms a Delaware LLC to expand operations in the U.S. To accept payments through Stripe and open a business bank account, they apply for an EIN by calling the IRS. After submitting Form SS-4, the EIN is issued on the same day. This enables the business to operate legally, hire locally, and meet compliance needs.
Conclusion
Obtaining a U.S. EIN is an essential part of starting your business operations in the United States. Whether you’re a resident or a foreign entrepreneur, following the right process ensures tax compliance, smooth banking, legal hiring, and access to platforms like Stripe or PayPal. Always complete Form SS-4 accurately and use the correct submission channel based on your residency.
Suggested Read :
LLC Operating Agreement in USA
Article of Organization of LLC Company
Business Structures in the U.S.
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