Have you decided to invest in real estate in the United States through a company? Does your Israeli company want to establish an American subsidiary? One of the first steps you’ll need to take is obtaining an EIN.
What is an EIN? When is it required, and how can it be used? How do you apply? Find out everything you need to know below.
What is an EIN?
EIN stands for Employer Identification Number. It is a unique, nine-digit number issued by the IRS to identify businesses for tax purposes. The EIN is also known as a Federal Tax Identification Number (FTIN). Essentially, it functions as the business equivalent of a Social Security Number (SSN) for individuals.
When is an EIN Required?
Let’s first clarify situations where an EIN is not required:
- A U.S. citizen operating as an individual (without forming a business entity) can use their SSN instead.
- A non-U.S. citizen operating as an individual (without forming a business entity) may use an Individual Taxpayer Identification Number (ITIN) instead.
For businesses, the need for an EIN depends on the structure and activities of the entity. Despite its name, an EIN is not only for employers—it is often required for tax, regulatory, and banking purposes. Consider these key scenarios:
Business Entities That Require an EIN
- Sole Proprietorship: If it has employees, a pension plan, or is required to file excise taxes. Otherwise, an EIN is optional but recommended for business banking and credit purposes.
- Single-Member LLC: Required if it has employees or elects to be taxed as a corporation.
- Multi-Member LLC: Always required.
- C-Corporation: Always required.
- Partnerships: Always required.
- Non-Profit Organizations: Required for tax-exempt applications and business operations.
- Trusts & Estates: Required unless a grantor trust uses the owner’s SSN.
What is an EIN Used For?
An EIN is essential for:
- Opening a business bank account
- Hiring employees
- Filing tax returns
- Complying with state and municipal regulations
- Preventing identity theft
- Maintaining legal separation between business and personal finances
Once assigned, an EIN remains associated with the business entity throughout its existence. If a business ceases to use its EIN, it must request cancellation from the IRS with a valid reason.
How to Apply for an EIN
The EIN application process depends on the applicant’s location and available documentation:
- Online Application (Fastest)
- Available on the IRS website
- Only for businesses with a U.S. address and a responsible party with an SSN or ITIN
- Phone Application
- Designed for international applicants who cannot apply online
- Requires calling the IRS directly
- Fax Application
- Available to all businesses, including those with a responsible party without an SSN or ITIN
- Processing time: Approximately four weeks
- Mail Application (Slowest)
- Available to all applicants, including those outside the U.S.
- Processing time: Four to eight weeks
What Does the EIN Application Require?
The EIN application collects details such as:
- Business structure
- Ownership details
- Reason for EIN issuance
- Identification of the responsible party (corporate officer, partner, trustee, etc.)
Need Assistance?
Not sure if you need an EIN? Confused by the application process? MasAmerica provides U.S. tax consulting services in Israel and can assist with your EIN application.
Contact Us Today
This article does not constitute legal advice. We recommend consulting with MasAmerica’s team of U.S.-licensed attorneys and accountants for professional guidance.
