How To Do Business With an ITIN

Many entrepreneurs in the U.S. may not qualify for a Social Security Number (SSN) but still need to comply with U.S. tax laws and establish a foundation for their ventures. If this describes you, an Individual Taxpayer Identification Number (ITIN) could be your gateway to lawful and successful entrepreneurship in the United States.

What Is an ITIN?

The Individual Taxpayer Identification Number (ITIN) is a nine-digit number issued by the Internal Revenue Service (IRS) to individuals who are required to have a U.S. taxpayer identification number but are not eligible to obtain a Social Security Number.

ITINs are issued regardless of immigration status. Whether you’re a nonresident alien, a U.S. resident alien (based on days present in the U.S.), or a dependent or spouse of a U.S. citizen or resident alien, you can apply for an ITIN.

Crucially, the ITIN:

• Is not a form of identification
• Does not authorize the holder to work in the U.S.
• Does not provide Social Security benefits
• Cannot be used to claim the Earned Income Tax Credit (EITC)

Benefits of Having an ITIN for Business

While limited in some areas, an ITIN still opens many doors for entrepreneurs. Here’s how it can empower your business:

• Compliance With U.S. Tax Laws: One of the most important reasons to obtain an ITIN is to ensure that you’re filing your tax returns legally. The IRS requires individuals who receive income from U.S. sources to report it—even if they don’t have an SSN.
• Open Business Bank Accounts: Many banks accept an ITIN to open business accounts, though requirements vary by institution. An ITIN can be used in lieu of an SSN, allowing you to separate your personal and business finances.
• Apply for Business Licenses and Permits: With an ITIN, you may qualify to apply for the necessary licenses and permits required to operate your business legally, depending on your state and local regulations.
• Build U.S. Credit History: Building a business credit profile is critical for growth. ITIN holders can apply for credit cards, small business loans, and vendor credit lines that help establish a solid financial reputation. While possible, access to credit may depend on the lender’s policies and your financial profile.
• Access Financial Services: You may also be able to access merchant services, secure lines of credit, and use platforms that require identity verification (e.g., payment processors, internet service providers, and phone services).

Using an ITIN for Business Purposes

While an ITIN is not a substitute for full legal residency or employment authorization, it still enables entrepreneurs to do the following:

• Obtain an Employer Identification Number (EIN) from the IRS. This is essential to start a business entity such as an LLC or C-Corporation.
• File federal tax returns under your ITIN to remain compliant with tax obligations.
• Open interest-bearing bank accounts and business savings accounts.
• Apply for credit cards, vendor credit, and business loans.
• Set up utility services like internet, electricity, or phone plans, often requiring a credit check.
• Some states allow ITIN holders to apply for a driver’s license, but eligibility depends on local laws and may require additional documentation.
• File partnership tax returns with U.S. citizen partners or other ITIN holders.

Business Structures That Work for ITIN Holders

Once you have your ITIN, selecting the appropriate business structure is key. Here are a few tax structures available for businesses in the U.S.:

• Sole Proprietorship
• Limited Liability Company (LLC)
• S-Corporation
• C-Corporation
• Non-Profit Organization

Best options for ITIN holders:

• LLC (Limited Liability Company): Flexible, low maintenance, and with pass-through taxation, this is a popular choice for ITIN holders. It separates personal and business liabilities.
• C-Corporation: Ideal for those planning to scale significantly or raise outside funding. C-Corps are taxed separately, but can offer a more credible structure for outside investment.
• Non-Profit: If your purpose is charitable, religious, or educational, you may explore the non-profit structure. While more complex to maintain, it provides tax-exempt status under certain conditions.

Applying for an ITIN

Ready to get started? Here’s how you can apply for an ITIN:

• Complete IRS Form W-7: This form is the official Application for IRS Individual Taxpayer Identification Number and is available for download on the IRS website.
• Gather Your Documentation: You’ll need to prove your identity and foreign status. Accepted documents include passport, national ID card, U.S. or foreign driver’s license, state ID or foreign voter registration, civil birth certificate, medical or school records (for dependents). 
• Submit the Application: You can submit Form W-7 and your supporting documentation by mail, in person, or through an IRS Certified Acceptance Agent. 
• Wait for Processing: Typically, it takes about 7 weeks to receive your ITIN. During peak times or if additional information is needed, it may take longer.

Special Note: Foreign-Based Entrepreneurs

Some ITIN holders may not live in the U.S. For example, if a business owner resides in Mexico and was recently deported, they may still operate a business in the U.S. remotely. In such situations:

• The business entity must update its IRS tax records to reflect foreign ownership.
• The company will need to comply with tax rules for foreign-owned U.S. businesses, which may include filing Form 5472.
• You may need a U.S.-based agent or representative to handle business correspondence and legal matters.

Final Thoughts: Partner with a CPA for Success

Operating a business in the U.S. as an ITIN holder is not only possible—it’s a well-trodden path for many thriving entrepreneurs. At our CPA firm, we specialize in helping ITIN holders build and run businesses confidently and lawfully. We offer:

• Business formation consulting
• Tax planning and compliance
• Bookkeeping and payroll services

If you’re ready to take the next step in your business journey with an ITIN, reach out to us today for a consultation. Let’s build your future together—legally, strategically, and successfully.