If you are a small business owner residing in the USA without a social security number, you need to file an ITIN application.
Without a social security number or ITIN, you will not be able to file your taxes in a simple manner, receive your tax return or obtain the small business loans that you need to successfully run your business.
They are meant for foreign individuals who do not meet the requirements to obtain a social security number. The IRS issues ITINs to help individuals abide by U.S. tax laws, regardless of immigration status.
If you are a foreign entrepreneur living in the United States, here’s what you need to know about obtaining an ITIN and how it can help you.
The Basics: What is an ITIN?
An ITIN is an Individual Taxpayer Identification Number.
It is a tax processing number that is issued by the IRS in lieu of a social security number (SSN). Typically, residents of the United States would use their social security number to efficiently process tax payments and returns.
Many foreign entrepreneurs, however, do not meet the requirements to obtain an SSN. As a solution to this problem, the IRS offers ITINs as an alternative since nonresidents are still required to comply with tax laws.
It should be noted, though, that ITINs do not authorize one to work in the U.S., make one eligible for social security benefits or qualify a dependent for earned income tax credit purposes.
The Application Process: What You Need to Know
According to the IRS, if you meet the following requirements, you need to begin the ITIN application process:
- You don’t have an SSN and are not able to obtain one
- You are required to file a federal tax return or furnish a federal tax identification number
- You are in one of the following categories:
- Nonresident alien who needs to file a tax return
- Resident alien filing a tax return
- Dependent or spouse of a resident alien or nonresident alien
- Nonresident alien claiming tax treaty benefit
- Nonresident alien student, researcher, or professor filing a tax return or claiming an exception
Fortunately, the ITIN application process is fairly straightforward.
You have 3 options to do so:
- You can mail your W-7, proof of identity, tax return, and foreign status documents to the IRS.
- You can apply in-person for an ITIN at an IRS-authorized Certifying Acceptance Agency. Using this method, you will not have to provide proof of identity or foreign status documents.
- To avoid providing proof of identity and foreign status documents, you can make an appointment at an IRS Taxpayer Assistance Center.
ITIN is Also a Great Way to Get a Small Business Loan
Besides using it for tax purposes, one of the main reasons you might need an ITIN as an entrepreneur in the U.S. is to obtain a small business loan.
Small business loans are a great way to get your business off the ground by purchasing equipment, hiring employees, or buying real estate.
To apply for a small business loan, you’ll need:
- Financial Records (bank statements, pay stubs, etc.)
- Identifying Information (ITIN, Driver’s License, etc.)
- Business Plan
- Business Ownership Information
- Tax Return Information
- Credit Information
Whether you’re applying for a loan at a bank, the SBA, or an alternative lender, you’ll have to be able to provide this information. Without an ITIN, you will not be able to meet these requirements.
Is a Small Business Loan Right for my Business?
Emir emigrated to the United States from India and opened a business, but now he realizes he requires financial assistance. After all, equipment costs, employee salaries and other expenses can add up quickly. He asks himself these questions to decide if he needs a small business loan:
- Do I require expensive equipment that you cannot afford?
- Do I have enough money to run my business, but not enough to expand it?
- Do I need a larger team?
These are a few of the primary reasons any business owner might need a small business loan. Like Emir, if you answered yes to any of these questions, the answer to whether or not a loan is right for you is likely yes.
Emir applied for an ITIN, not only to be able to get a business loan, but to be able to pay his taxes. Now his business is thriving.
Don’t wait any more time, start learning about all the advantages an ITIN can give you
Obtaining an ITIN as a foreign entrepreneur in the United States is incredibly important. In order to comply with U.S. tax laws, process your tax returns, and obtain small business loans, you’ll need to be able to provide a tax processing number.
Fortunately, the ITIN application process is incredibly easy, so there’s no reason not to get started today.
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