Starting a U.S. business as a foreign founder comes with many questions, but one of the most common is: Do I need an ITIN or an EIN? These two identifiers often get confused, yet they serve very different purposes in the American tax system.
Choosing the right one—and knowing when you might need both—is crucial for staying compliant, opening bank accounts, and avoiding delays with the IRS.
This guide breaks down what an ITIN and EIN are, who needs them, how to get them, and the key differences foreign business owners should understand.
What Is an ITIN?
An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the IRS. It is designed for individuals who are required to file or report U.S. taxes but who are not eligible to obtain a Social Security Number (SSN). ITINs are always nine digits, starting with the number "9."
Foreign founders sometimes assume that because their business has an EIN, they also automatically have what they need personally. But that is not the case. An ITIN is strictly tied to individuals, not entities.
For example, if you are a partner in a U.S. LLC that files Form 1065, you may need an ITIN so the IRS can properly track your share of income. Without it, the IRS cannot process your K-1 correctly, and the partnership’s tax filing can be considered incomplete.
An ITIN is also required if you, as a non-resident, want to claim tax treaty benefits on certain kinds of U.S. income. For example, if you receive royalties from the U.S. and your country’s treaty lowers the withholding rate, you would need an ITIN to make that claim.
In other situations, a foreign spouse or dependent listed on a U.S. tax return may need an ITIN. But for business purposes, the most common use is when a foreign person is a partner in a U.S. entity that files with the IRS.
Common Example
Imagine a French entrepreneur who owns 50% of a Delaware LLC taxed as a partnership. The LLC must file Form 1065 and issue Schedule K-1s to its members. The French owner does not automatically need an ITIN simply to be listed on a K-1.
However, if the French partner is required to file a U.S. tax return, such as a Form 1040-NR to report effectively connected income, then they would need to obtain an ITIN so the IRS can properly process that filing.
What Is an EIN?
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS to a business entity for tax reporting. Think of it as the company’s Social Security Number. Every U.S. company—LLC, corporation, or partnership—must obtain an EIN to interact with the IRS.
Even a single-member LLC owned by a foreigner with no U.S. operations still needs an EIN if it is required to file Form 5472.
An EIN is essential for filing federal tax forms, hiring employees, and opening a U.S. bank account. Without an EIN, you cannot meet basic compliance obligations, and most U.S. banks will not allow you to open a company account.
Common Example
A founder in India forms a Delaware C Corporation to raise venture capital. Before opening a bank account or filing its first Form 1120, the corporation must apply for and receive an EIN. This number becomes the permanent identifier for the business in all dealings with the IRS.
Key Differences Between ITIN and EIN
Although both are issued by the IRS, they serve very different roles. The ITIN identifies an individual for tax purposes, while the EIN identifies a business. An ITIN is tied to a person, while an EIN is tied to an entity.
An ITIN is needed when the IRS must track personal-level reporting, such as partnership income or treaty claims. An EIN is required whenever a business entity exists and must file its own federal tax forms.
Some foreign founders mistakenly believe that obtaining an EIN for their LLC means they personally never need anything else. That is only true if their business is structured in a way that does not pass income through to them directly, such as a corporation.
But if the entity is a partnership, the IRS expects each partner—including non-residents—to have an ITIN for proper reporting.
Do You Ever Need Both?
Sometimes, yes. Every U.S. business will need an EIN, but whether a foreign founder also needs an ITIN depends on whether they personally have a U.S. tax filing obligation.
For example, imagine two founders, one from Germany and one from Brazil, forming a Delaware multi-member LLC. The LLC must obtain an EIN so it can file its partnership return on Form 1065 and issue K-1s. The K-1s can be prepared without the partners having ITINs.
However, if either foreign partner is required to file a U.S. individual tax return, such as Form 1040-NR to report effectively connected income, then they would need to obtain an ITIN so the IRS can process that filing.
In contrast, if the same two founders had formed a Delaware C Corporation, the company would only need an EIN. The foreign shareholders themselves would not need ITINs unless they later had a personal U.S. tax obligation requiring them to file individually.
How to Get an EIN as a Foreign Founder
The process of obtaining an EIN is more straightforward than many fear. You do not need a Social Security Number to apply. The application is made on Form SS-4, where you state the type of entity and note that the responsible party does not have a Social Security Number.
The form can be faxed or mailed to the IRS, and in some cases, international applicants may call to apply by phone. Approval times range from a few days by fax to several weeks by mail.
Working with Bookmate ensures that the application is properly completed. Many applications are rejected due to errors in the responsible party section or misclassification of entity type. These rejections can delay bank account openings or tax filings, creating unnecessary stress.
How to Get an ITIN as a Foreign Founder
Obtaining an ITIN is more complicated. The IRS requires Form W-7 along with original or certified documentation proving identity and foreign status, usually a passport. The IRS does not accept simple photocopies. Documents must be certified by the issuing agency or an IRS-approved Certifying Acceptance Agent (CAA).
Most ITIN applications are submitted alongside a tax return, often the first year the partnership files.
For example, if a Delaware partnership files Form 1065 and issues a K-1 to a foreign partner, that partner’s ITIN application will be attached to the tax filing. The IRS then processes both together. Processing can take 8–12 weeks or more, so planning ahead is essential.
Since Bookmate does not handle ITIN applications directly, we partner with theitin.com, a service dedicated to helping foreign individuals obtain ITINs.
By working with them, founders can ensure their ITIN process ties smoothly into required tax filings, reducing the risk of rejection. Many who attempt to submit uncertified documents on their own face long delays.
Common Mistakes Foreign Founders Make
One of the biggest mistakes is assuming that EINs and ITINs are interchangeable. They are not. Another frequent issue arises when foreign partners in an LLC assume they do not need an ITIN until the IRS forces the issue, often with penalty letters.
Delays in obtaining an EIN are another mistake—without an EIN, the company cannot open a U.S. bank account, delaying operations. Finally, ITIN applications are often rejected because documents are not properly certified, forcing resubmissions and wasted time.
Real-World Example
A founder from Mexico sets up a Delaware single-member LLC to sell software. The LLC must obtain an EIN to file its annual Form 5472. Because it is a single-member LLC disregarded for U.S. tax purposes, the founder does not personally need an ITIN unless they earn other U.S.-sourced income.
In contrast, two Spanish entrepreneurs forming a Delaware multi-member LLC will face a different scenario. Their LLC must obtain an EIN for its partnership return, and each Spanish partner may need an ITIN if they are personally required to file a U.S. return.
Why This Matters
Getting this right matters because the penalties for non-compliance are severe. Missing Form 5472 can cost $25,000 per occurrence, even if your company had no revenue. Late partnership filings result in $240 per partner, per month, up to 12 months.
These penalties add up quickly. Having the correct identifiers—EIN for your business, and ITINs for individuals when required—is the first step to avoiding these fines.
How Bookmate Can Help
Bookmate helps foreign founders identify exactly which numbers they need. While we do not directly apply for EINs or ITINs, we guide clients on when they are required and connect them with trusted partners.
For ITINs, we partner with theitin.com to ensure applications are properly certified and attached to tax filings, reducing the risk of costly rejection.
We then handle the related federal tax filings—whether Form 1120 for corporations, Form 1065 for partnerships, or Form 5472 for single-member LLCs—so your company stays compliant.
Every tax situation is unique. That is why foreign founders should not rely on generic advice but instead work with a partner who understands the complexities of non-resident compliance.
Learn more at trybookmate.co or book a free consultation today.
Final Thoughts
For non-resident founders, ITINs and EINs are among the first hurdles to cross in setting up a U.S. business. Your company will always need an EIN. You personally may need an ITIN if you are part of a partnership or must file individually.
Getting this right early saves time, prevents penalties, and allows your U.S. venture to grow without compliance roadblocks. With guidance from Bookmate, you can avoid costly mistakes and focus on building your business.
