How to Get ITIN for Non Resident LLC Owners?

Forming a Limited Liability Company (LLC) in the US is a great opportunity for non residents. It allows foreign entrepreneurs to access the lucrative US market, enjoy tax advantages, and protect their assets.

The best part? You don’t need to be a US citizen or resident or even live in the US to start an LLC here. You can expand your business in this robust economy and manage your assets more securely, all without stepping foot on its soil.

Here’s a complete guide on how to apply for ITIN for non resident LLC owners.

Benefits of Owning a US LLC for Non Residents

As a non resident, forming an LLC in the US market can seem daunting and risky. Here are a few benefits that really show the value of owning a US LLC for non residents.

Access to the US Market

The US has the largest consumer market in the world, with a GDP exceeding $25 trillion as of 2023. By owning a US-based LLC, non residents gain a foothold in this lucrative market. They’ll be able to sell products or services to a vast and diverse customer base.

This will also open doors to new business partnerships, expansion opportunities, and a wider network of suppliers and distributors.

Limited Liability and Asset Protection

One key feature of an LLC is its limited liability structure. This means the owners or “members” are generally not personally liable or responsible for the LLC’s debts or legal obligations.

This can be particularly helpful as a non resident as it protects your personal assets when the business is in financial or legal trouble.

Tax Flexibility

With an LLC, you have complete control over how the business is taxed. For example, you can go for the default “pass-through” tax. In this option, the company’s profits and losses pass through to your personal tax returns to avoid corporate double taxation.

This can benefit non residents since it optimizes their tax situation depending on their home country’s tax agreements with the US.

For instance, suppose you live in a country with a double taxation treaty with the US, such as Canada, the UK, or Australia. Pass-through taxation allows profits to be taxed only in one jurisdiction, often in your home country. The tax treaty specifies which country has primary taxing rights, potentially allowing you to claim foreign tax credits to reduce or eliminate tax liability in the US.

Building Credit and Banking Opportunities

Owning a US LLC allows non residents to build credit in the US system, which can be useful for financing and opening business accounts with US banks. A US-based business account will allow for smoother transactions with American clients and vendors. Meanwhile, a solid credit history can help secure business loans and premium credit cards.

Easy to Form and Manage

The process of forming an LLC in the US is relatively simple, even for non residents. You don’t need to be physically present in the US, and many states offer online registration. Once established, an LLC has fewer compliance requirements than traditional corporations.

The Importance of ITIN for Non Residents

Before you learn how to get ITIN for non resident online, let’s find out what ITIN actually is.

An Individual Taxpayer Identification Number (ITIN) is a critical piece of documentation for non residents forming LLCs in the US. While ITINs are primarily used for tax purposes, they also have other uses. Here’s why having an ITIN is crucial for non residents:

Tax Compliance

The primary reason for obtaining an ITIN is to comply with US tax laws. Non-residents who earn income in the US through an LLC or other business ventures must report that income to the IRS.

An ITIN allows non residents to file their tax returns and avoid penalties for non-compliance. It also allows non residents to claim tax treaty benefits or refunds where applicable.

Opening US Bank Accounts

Most U.S. banks require an ITIN to open business accounts for non residents. A US bank account is crucial if your LLC works with US-based clients. An ITIN is essentially a form of identification that streamlines the process of opening a business bank account.

Establishing Credit

An ITIN allows non residents to build credit in the US system. Establishing credit allows you to obtain business loans, qualify for premium credit cards, and even lease office space or equipment. A solid credit history will go a long way when expanding business operations and investing in financial resources.

Hiring Employees

If a non resident LLC owner plans to hire employees, an ITIN will be required for filing employment tax returns and other compliance-related documents. It verifies that the business is operating legally and adhering to US tax regulations.

How to Get ITIN for Non Resident LLC Owners

Now that you know why you need an ITIN as a non resident LLC owner, it’s time to answer the question: how do I get an ITIN for non resident LLC owners?

Step 1: Choose Your State

First and foremost, you need to decide where you’ll register your LLC. Popular choices for non-US residents are Delaware and Wyoming:

Delaware is a popular option for LLCs hoping to attract investors. The state’s business-friendly legal framework and corporate infrastructure make it a great choice for many venture capitalists and private equity firms. However, the company registration fees in Delaware tend to be higher than in other states.

Wyoming is known for its low business fees and lack of personal/corporate income taxes. The state also has less stringent requirements for maintaining corporate status. If you plan to physically operate in a different state, registering there might be more practical.

When choosing a state, consider two factors: company registration fees and the likelihood of attracting investors. States like South Carolina have low registration fees and do not require annual reports, which can reduce overhead costs. Delaware, while more expensive, is often preferred by investors due to its well-established corporate laws.

Step 2: Complete Form W-7

Form W-7 is the main application form required for an ITIN. Here’s how to complete it:

1. Select the reason for your ITIN application. If you’re a non resident LLC owner, this is typically for filing a tax return or claiming a tax treaty benefit.
2. Provide your full government name, mailing address, date of birth, and country of citizenship.
3. Attach a copy of your passport or other acceptable forms of ID to verify your identity and foreign status.

Step 3: Gather Supporting Documents

To support your ITIN application, you’ll need a certified copy of your passport. A certified copy is different from a notarized copy. You must obtain this from the issuing authority, such as your country’s passport office.

You’ll also need proof of US LLC ownership. This can be your LLC’s articles of organization, operating agreement, or a letter from the LLC’s managing member.

Step 4: Submit the Documents

There are a few different ways to submit the Form W-7 and document

1. Mail to the IRS: You can mail your application to the IRS along with your supporting documents. Use the address provided in the W-7 instructions.
2. In-Person at an IRS Taxpayer Assistance Center (TAC): If you’re in the US, you can make an appointment at a TAC to submit your application and documents. You can also submit them through an IRS-authorized Acceptance Agent.

Acceptance Agents are organizations like colleges, banks, or accounting firms authorized by the IRS to help applicants obtain ITINs. They review your documents and submit the completed Form W-7 to the IRS for processing.

1. Through a Certified Acceptance Agent (CAA): CAAs are authorized to verify your documents, which means you can keep the originals. This is the most convenient option for non residents.

Step 5: Wait for ITIN Processing

The IRS typically takes 7–11 weeks to process ITIN applications. During this time, your supporting documents will be verified, and you will receive your ITIN by mail.

Step 6: Use Your ITIN for Business Operations

Once you receive your ITIN, you can:

• File US tax returns. Use your ITIN to report income and comply with tax obligations.
• Open US business bank accounts. Your ITIN may be required by banks for identification.
• Build credit. Start building a credit history in the US, which can open doors to business loans and premium credit cards.

How to Build a Credit History With Credit Cards

Getting your ITIN allows you to build credit in the US system, which can come in handy in many ways. Here are three credit cards you can apply to once you have your ITIN.

Credit Card ProviderMinimum BalanceBenefitsAnnual FeeAmerican Express$100,000 in assetsTravel, hotels, entertainment, and shopping$0 to $695Wells Fargo$25 or 1% of your new balanceTravel, protection, and lifestyleNoneChase$40 or 1% of your statement balanceTravel protection$95 and $550

Conclusion

Now that you’ve read our guide, you can successfully apply for an ITIN and enjoy the benefits of owning a US-based LLC as a non resident.

If you’re looking for a professional to guide you through the process, reach out to us at Work, Wealth, and Travel. Our experts specialize in helping non residents navigate US business and tax regulations.

Contact us today so you can kickstart your success in the US market.