USA

Understanding EIN, ITIN & Tax Basics for Non-Resident Founders in the USA 

Starting a business in the States and starting your American dream as a non-resident founder can feel like a huge wall with so many unknowns.  EIN, ITIN, forms for LLCs, at some point, founders stop and wonder if everyone else already knows these rules. Many founders find themselves chasing an EIN weeks before bank onboarding, then scrambling for an ITIN when their accountant flags it as mandatory for personal tax forms.  

If you’re reading this, you’re already ahead, because figuring these things out before trouble hits is the only way forward. Besides understanding company registration in USA, founders must also know about EIN, ITIN, and tax basics.  

This guide walks through the EIN for foreigners, the ITIN for non-residents, and the more complex aspects of LLC tax rules. In this blog, we’ll cover IRS bureaucracy, real founder mistakes, tables, and details that matter. 

Why Non-Resident Founders Need an EIN, ITIN, and to Understand USA Tax for Non-Residents? 

Why do knowledgeable founders bring up EINs and ITINs alongside “registered agent” and “Delaware”? The answer’s straightforward: they’re essential for legitimacy in the U.S. system. Everything from opening bank accounts to signing contracts with American clients, setting up Stripe or PayPal, or hiring staff starts with tax identity numbers. 

For foreign founders, platforms and banks don’t care about location; they need to see formal inclusion in the U.S. system before money moves or signatures carry weight. When founders reach for a wire transfer and realize they’re missing one of these numbers, there’s no workaround. Compliance isn’t optional if you want to do smooth business in the USA, or anywhere, ideally.  

Consider managing a SaaS company from Paris while incorporating a U.S. LLC to onboard North American clients. Founders need an EIN for foreigners to satisfy banks and platforms like Shopify, PayPal, and Stripe. Accountants often advise that an ITIN will be necessary to handle withholding or file personal tax forms. This isn’t hypothetical; it’s what non-residents around the world steer daily. 

The EIN for Foreigners- Exploring Business Basics 

The EIN (Employer Identification Number) serves as a company’s ID card to the IRS. This section covers everything first-time founders need to know about establishing proper employer status in the USA. 

What is an EIN (Employer Identification Number)? 

The EIN for foreigners’ functions as the company’s fingerprint for every U.S. transaction. The IRS uses it to recognize LLCs or corporations, process tax forms, and connect with every relevant government system from state compliance to bank onboarding and payroll filings. If there’s one identifier businesses can’t function without, this is it. 

Why Foreign Founders Must Care? 

Opening U.S. Bank Accounts: Most American banks refuse new business clients without an EIN, with no exceptions. 

Payment Processors: Stripe, Square, PayPal. Every major merchant platform requires an EIN before releasing funds. 

IRS Reporting: Every annual and quarterly tax filing for LLCs or C-Corps references the EIN. 

Hiring: Putting employees on payroll requires an EIN. 

How Non-Residents Actually Apply for an EIN? 

The process splits for U.S. citizens and foreign founders. Citizens can use the IRS online portal. Non-residents must use traditional methods: fax or mail Form SS-4. Many founders use virtual addresses in business-friendly states for their LLC’s registered agent to ensure IRS paperwork doesn’t get lost. 

Application Walkthrough 

Step 1: Form Your Business (LLC, C-Corp, etc.) 

• Pick your state, set up a registered agent, and get Articles of Organization 

• Ensure company name consistency everywhere, spelling errors can stall EIN applications for weeks 

Step 2: Fill IRS Form SS-4 

• Download from IRS.gov and complete every line with address, business purpose, and entity type. 

• Leave the SSN/ITIN field as “Foreign” or “N/A” 

• State exactly why you’re applying, specific reasons like “Opening foreign-owned LLC to accept payments” work well 

Step 3: Designate the Responsible Party 

• Must be a real person, ideally the founder, though agents can help if needed 

• Use a reachable U.S. address when possible 

Step 4: Submit by Fax or Mail 

• Fax to the IRS international number, results typically come in 1-2 weeks 

• Mail takes longer 

• Always keep postage or fax confirmations as proof 

Pro Tips 

• Virtual U.S. mailing addresses are IRS-accepted and help with smoother banking. 

• Update IRS info immediately if names change or registered agents move 

• For urgent cases, calling the IRS directly (despite painful holds) often proves quicker than mail 

Common Pitfalls 

• Submitting forms with minor typos 

• Omitting the business type or choosing the wrong entity box 

• Failing to designate a responsible party 

• Mailing from overseas without tracking; some founders nearly miss their EIN because IRS letters go to the wrong agents 

ITIN for Non-Resident Founders: Personal Tax Identity 

If the EIN serves as the employer’s ID card, the ITIN functions as the personal ID for individuals earning income. This identifies personal tax liability. 

What is an ITIN? 

The Individual Taxpayer Identification Number (ITIN) is the U.S. personal tax identity for anyone ineligible for a Social Security Number. It matters for non-resident founders because many bank accounts, payment processors, and IRS personal filings require an individual identifier separate from the entity’s EIN. 

Who Needs an ITIN? 

• LLC owners who need to file personal tax returns (often via Form 1040-NR) 

• Anyone receiving U.S. income directly (royalties, rent, investment distributions) 

• Non-U.S. “responsible parties” listed on IRS business filings 

• Partners in American LLCs or corporations 

How to Get an ITIN? 

The process involves filling out Form W-7 meticulously, with explanation for why the ITIN is needed. Founders provide identification like a passport or certified national ID, submitting to the IRS directly or through a Certified Acceptance Agent. Working with an agent often proves worthwhile, they understand IRS quirks and keep paperwork safe. 

Application Breakdown 

1. Fill out Form W-7 

2. Gather certified copies of identification; never send originals by mail 

3. Submit documents with tax forms (if required) via the IRS or an agent 

4. Wait, expect 8-12 weeks or longer 

5. If rejected, clarify the reason for the application and resubmit 

ITIN Traps 

• Assuming ITIN and EIN are interchangeable (they aren’t) 

• Waiting until the last moment; U.S. payment platforms sometimes freeze funds until ITINs arrive 

• Not using an agent for certified copies, risking lost original passports 

LLC Tax Rules for Non-Resident Founders: No Shortcuts 

Setting up an LLC is a milestone, but compliance doesn’t end with formation especially for non-resident founders. IRS rules around taxable revenues, required forms, and penalty triggers are layered and sometimes counterintuitive. 

U.S. Taxation for LLCs Owned by Non-Residents 

The IRS focuses on “effectively connected income” profits tied to actual U.S. business activity. Founders who never enter the U.S. or sell only overseas may avoid U.S. income tax, but must still file returns and disclosures. For U.S.-source income, the IRS expects tax filings even when zero tax is owed. 

LLC Structure	Required IRS Forms	Penalty Magnitude
Single-member LLC	Form 5472, pro-forma 1120	$25,000 per missed filing, recurring
Multi-member LLC	Form 1065, K-1s	Confusing allocation leads to late fines
Foreign partners	Form 1040-NR (if income)	Forgetting triggers audits
Any LLC	State annual report	Varies: up to $800/year in some states

Real Founder Example 

Many founders file Form 5472 late in their first year, shocked to discover the fine reaches $25,000 for a missed form with no actual income. This catches most founders at least once unless they receive proper coaching. 

State Tax, Franchise, and Annual Report Considerations 

State filing creates additional complexity: 

• Every state requires an annual report, sometimes with fees (from $50 in Wyoming to $800 in California) 

• Franchise taxes: Some states bill LLCs a minimum tax even with no income 

• If customers or contractors are in a different state than the formation state, a “foreign qualification” in that state may be necessary, adding another paperwork layer 

LLC Tax Rules Essentials 

Single-member LLC: Taxed as disregarded entity, owner reports income via Form 1040-NR. Form 5472 is mandatory for foreign owners. 

Multi-member LLC: Partnership filing (Form 1065); K-1s to each partner, including overseas partners. 

C Corporation: 21% federal corporate tax, separate owner filings for salary/dividends. 

Effectively Connected Income: Only U.S.-related income is taxed, but failing to document “foreign status” or sales properly can trigger unwanted scrutiny. 

Compliance: From Paperwork to Penalties 

Compliance issues represent the most common challenges for founders crossing borders for business. USA tax for non-residents involves multiple requirements that must be addressed before business operations can begin. Here are key considerations: 

Filing LLC Tax Returns and State Reports 

Build a rhythm: calendar every IRS and state filing, set reminders a month ahead, and double-check registered agent details. 

Critical Annual Filings 

• IRS annual tax returns (Form 1040-NR, 1065, or 1120 + 5472) 

• State franchise tax (even “zero income” LLCs in California pay minimum fees) 

• Annual report (varies by state: name, address, ownership details; accuracy matters to avoid extra costs) 

Penalties and the IRS: Lessons Learned 

Skipping Form 5472 results in compounding per-return penalties ($25k per miss). Missing state annual reports risks company dissolution. Some LLCs nearly get terminated over PO box errors careful attention to LLC tax rules is essential. 

Best practices: 

• Treat every IRS or Secretary of State letter as urgent 

• When filing from overseas, keep certified mail receipts and check your email for e-file confirmation 

• Don’t mix business and personal banking the IRS closely monitors “commingling” funds 

Real-World Scenarios & Practical Tables 

Complex legal scenarios become clearer through real-world examples inspired by actual founder experiences in U.S. business operations. 

Scenario 1: LLC Formation and EIN Application as a Non-Resident 

Founders in Singapore form a Delaware LLC, use a local registered agent, and apply for an EIN by fax after setting up a virtual office. The IRS processes SS-4 in two weeks; founders open a U.S. Chase account, onboard with Stripe, and the business is ready for global sales. 

Scenario 2: Multi-member LLC Filing for Non-Residents 

Two founders based in Berlin and Mumbai set up Wyoming LLC. Both need ITINs to claim income; K-1 forms are filed for each, a Form 1065 partnership return is prepared, state annual report is filed via a registered agent. 

Table: Entity Type vs. Tax Filing Requirement 

Entity Type	Federal Filing	State Annual Filings	Owner IDs Needed
Single-member LLC	Form 5472, 1120	Annual Report, Franchise	EIN, ITIN
Multi-member LLC	1065, K-1, 5472	Annual Report, Franchise	EIN, ITIN
C Corporation	Form 1120, 5472 if needed	Annual Report, Franchise	EIN, ITIN

Common Mistakes, Founder Stories, and FAQs 

Some of the most common mistakes made by first-time US founders are listed below:  

Common Mistakes 

• Applying for EIN online as a foreigner, only possible with a U.S. SSN or ITIN 

• Mailing IRS forms without tracking, letters get lost, delays last months 

• Ignoring Form 5472 or believing zero income means zero compliance 

• Banking with mismatched names, every account must align with IRS records 

• Setting up in a state without understanding local franchise taxes 

Founder-Shared Wisdom 

Some founders manage five U.S. LLCs across three states, only to lose two due to missed annual reports. Others try opening accounts at three banks before realizing only one accepts foreign owners without U.S. addresses. There’s no substitute for obsessive documentation and asking for help more often than feels comfortable. 

Strategies for Staying Compliant 

In order to maintain compliance and steer clear of legal issues, non-resident founders in the USA must set up operational and legal procedures. Here are some tactics for just that: 

Create a Calendar to Ensure Compliance 

A strong foundation for compliance starts with well-marked, unambiguous calendars. Use Google Calendar, Notion, or Excel spreadsheets to remember all important dates. 

Configure notifications for compliance tasks 

Set reminders for at least one month prior to when each compliance issue is due. Sit with your legal and accounts team to keep up with the dates. To prevent reminder fatigue, keep notifications concentrated on important items. 

Choose a Reputable Registered Agent 

Every state requires that official correspondence, such as legal documents and compliance notices, be sent to a registered agent. Expert registered agents make sure that no crucial correspondence from the IRS or the Secretary of State is ignored or forgotten. For reliability, many founders collaborate with seasoned agents.  

Organize and Digitize Records 

This is a must. You should always store important documents, including bank statements, tax returns, EIN and ITIN confirmations, formation documents, and compliance notices. Sort by type and year for easy access. This makes finding what’s needed simple when deadlines approach or inquiries arise. 

Work with a U.S.-Based Accountant 

Accountants based in the United States with non-resident founder compliance experience can navigate complex regulations, help avoid common mistakes, and ensure filing accuracy. They also assist with tax planning and IRS notice responses. 

Use Compliance Software 

Consider compliance software or services that track deadlines, file annual reports, and send reminders. These tools save time and reduce the likelihood of missing important filings. 

Build a Compliance Routine 

Set aside a few minutes for a meeting each month with key compliance stakeholders (finance, legal, etc.). A roundtable will ensure all aspects of a compliance conversation are covered.  

The Reality Check 

The U.S. tax system changes. Rules shift. What worked last year might not cut it this year. Staying current means keeping in touch with your advisors and actually reading those regulatory update emails (or at least skimming them). 

But here’s the upside: the U.S. market is worth the hassle for a lot of founders. Access to customers, capital, and talent that’s hard to match elsewhere. The compliance complexity is real, but it’s manageable if you approach it like any other part of running a business, something that needs attention, resources, and occasional expert help. 

Done right, compliance becomes background noise. It runs quietly, keeping you out of trouble, freeing up mental space for the work that actually grows your business. That’s the goal. And honestly? It’s completely doable once you stop treating it like optional homework and start treating it like infrastructure. 

Get the basics right early. Stay organized. Ask for help when you need it. That’s pretty much the whole playbook. 

Wrapping Up: What Really Matters for Non-Resident Founders 

Look, dealing with U.S. tax compliance as a non-resident founder isn’t exactly fun. But it doesn’t have to be the nightmare some people make it out to be. The difference between founders who handle this smoothly and those who end up in a mess usually comes down to one thing: they took it seriously from the start instead of hoping they could figure it out later. 

Getting your EIN for foreigners and knowing when you need an ITIN isn’t just checking boxes. These numbers open doors literally. No EIN means no bank account. No bank account means no business. It’s that simple. 

And here’s the thing about LLC tax rules: they don’t go away. Form 5472 is due every year, whether you made money or not. State reports and franchise taxes have their own schedules. Miss one filing and suddenly you’re dealing with a $25,000 penalty or watching your LLC get dissolved. These aren’t scare stories; they happen to real people who thought they had more time. 

Hiring good help costs money upfront, but it’s cheaper than fixing mistakes later. Way cheaper. A qualified accountant who knows non-resident tax issues will save you more than they cost, almost guaranteed. Same goes for a solid attorney who understands fintech or SaaS compliance. To get further insights and help on this, talk to our experts at Enterslice today. 

Frequently Asked Questions