Have you decided to invest in real estate in the United States through a company? Does your Israeli company want to start an American subsidiary? One of the first things you will be required to do is to issue an EIN number. What is the EIN number? In what cases is it needed and how can it be used? And how do you issue an EIN number? Find out all this in the article before you
What is the EIN numbe
EIN is the abbreviation for the expression Employer Identification Number, and it is a sort of identification number used to identify business entities for tax purposes. The nine-digit number is also known as the Federal Tax Identification Number. In fact, this is the business alternative to the Social Security Number( known as SSN), which is used for identifying individuals who are American citizens.
In what cases is the issuance of an EIN necessary?
Let’s start with cases where there is no need to issue an EIN number. First of all, as stated above, insofar as an American citizen wishes to act as an individual (and not through any association), there is no need to issue an EIN number, since the Social Security number is used for identification purposes.
Second, as long as it is a foreign citizen seeking to act as an individual (and not through any association), there is also no need to issue an EIN number, since the identification will be done by ITIN (Individual taxpayer identification number) – a tax identification number of an individual who is not a US citizen.
When should you issue an EIN?
As far as the activities of a corporation are concerned the need to issue an EIN number should be examined. EIN, as stated above, is an identification number for employers. Is there an obligation for the corporation to employ employees in order for an EIN number to be issued? The answer is no, although by definition it is an identification number for employers the important thing is the company’s business activity and its conduct with various state bodies.
The following questions will help you determine whether an EIN number is required:
- Is the business exclusively owned (with or without employees)?
- Is the business bound as an L.C (with or without employees)?
- Is the business bound as a C-Corp or Partnership?
- Is this a non-profit body?
- Does the business deduct tax for foreign citizens?
- Is this a trust or an estate?
Exclusively owned business
If it is an exclusively owned business that does not employ employees, does not set aside pensions, and does not pay excise tax (tax for groceries that the government seeks to limit their consumption) – then there is no obligation to issue an EIN number. However, it is good for the business owner to do so and issue the number for other uses (such as opening a bank account, credit, etc.).
L.L.C Multi-Partner Company
Insofar as an L.L.C owned by multiple partners, the company is compelled to issue an EIN number that will be used in all its contracts with the tax institutions and other institutions.
L.L.C-owned by one partner
Insofar as a single owned L.L.C that does not employ employees, in the past, there was no obligation to issue an EIN, but a recent reform changed this, and such companies are currently also required to issue an EIN.
C-Corp
As for a C-Corp, it is compelled to issue an EIN number.
Non-profit organizations
A non-profit organization will be required to issue EIN in order to obtain appropriate licenses for its operations.
Trusts/ Estates
An EIN number will also be required.
What is the EIN number used for?
In addition to the EIN being an identification number used by the tax authorities when submitting the annual income report and the tax calculation, the number has additional uses:
- Used when opening a bank account.
- Used when hiring employees
- Dealing with state and municipal entities in the country where the business was established.
- Manage a deductions portfolio.
- Preventing identity theft.
- Strengthening the separate legal personality ( relevant when it comes to an L.C company with a single owner).
The EIN number issued to the company will be used by the company throughout its operations, and will not be transferred to any other party even if its use is discontinued. Cancellation of the number will be done by formally contacting the IRS while reasoning the request.
How do I issue an EIN number?
There are several ways to issue the EIN number:
Issuing an EIN number on the Tax Authority website
Online issuance on the Tax Authority website. This option is applicable only for entities that have an address in the United States and a responsible delegate with a TIN or SSN number.
Issuing an EIN number over the phone
A telephone issuing. This option is suitable for those who do not have a permanent address in the United States.
Issuing an EIN number by fax
Issuance by faxing. An option that is suitable for an entity with an address in the United States even when the responsible delegate does not have a TIN or SSN number.
Issuing an EIN number through the mail
Issue by a mail request. This option is available regardless of the location of the entity and the identification numbers of the responsible delegate.
What does the IPO request include?
The request must include general details about the entity: incorporation structure, owner details, the purpose of issuance, etc. In addition, the request must include identification information of a primary supervisor, general partner, or trustee who will serve as a responsible party and manage the company and its assets and matters with the Tax Authority.
Not sure if you need to issue EIN? Have you been tangled with the bureaucracy process? Issuing the EIN number is another one of the services that the MasAmerica team provides, and it will be happy to be at your disposal for any questions.
This should not be seen as legal advice. It is recommended to consult with Masamerica’s team before any action. The service is provided by a professional team, who speak English and Hebrew fluently and includes lawyers and accountants with American licensees.
