Updated
ITIN for Small Business Owners: When You Need One (2026)
When Does a Small Business Owner Need an ITIN?
- Owner is a non-US resident with US tax filing obligation
- Owner is a US resident without an SSN
- Business is a sole proprietorship without employees (no EIN required)
- Owner files Form 1040 or 1040-NR personally
- Stripe, PayPal, or other payment processors request a US tax ID for the individual
- Bank requires a tax ID to open a personal or sole-proprietor account
ITIN vs EIN: Which Should a Small Business Use?
| Entity Type | Tax ID Used |
|---|---|
| Sole proprietor (no employees) | ITIN (owner) |
| Sole proprietor with employees | EIN + ITIN (owner) |
| Single-member LLC | EIN + ITIN (owner) |
| Multi-member LLC / Partnership | EIN |
| C-Corp / S-Corp | EIN |
For full ITIN vs EIN coverage, see the ITIN vs EIN comparison and ITIN for LLC owners.
What Are the Steps to Get an ITIN for a Small Business?
- Confirm the need. Match the situation to the checklist above.
- Determine reason code on Form W-7 line 6. Business owners typically use code "a" (filing US tax return) or "h" (exception 1, treaty benefits or passive income).
- Prepare supporting documents. Passport, US tax return (if filing one with the W-7), or exception documentation.
- Submit through a CAA. Avoids mailing the original passport.
- Receive CP565. 7-11 weeks; the ITIN is then used on bank and processor forms.
What Banking and Payment Setup Works for Small Businesses with an ITIN?
Sole proprietors use personal-style banking (Capital One, Bank of America branch, Wells Fargo branch) with the ITIN. LLCs and corporations open business accounts at Mercury, Relay, or Brex with the EIN. Stripe and PayPal accept ITIN on the individual W-9 and EIN on the business W-9. For specific use cases see ITIN for freelancers and ITIN for independent contractors.
Frequently Asked Questions About ITIN for Small Business
An ITIN is needed when the owner is a non-US resident with a US tax filing obligation, when the business is a sole proprietorship without an EIN, when the owner files Form 1040 or 1040-NR, or when payment processors (Stripe, PayPal) require a tax ID for the individual.
Sole proprietorships without employees use the owner's ITIN (or SSN). All other structures (LLC, partnership, corporation, sole proprietor with employees) need an EIN. Most non-resident-owned US LLCs combine both: EIN for the entity, ITIN for the owner's personal Form 1040-NR.
Yes. Non-US residents can own US LLCs, S-Corp shareholders (with limits), and C-Corps. The entity needs an EIN; the individual non-resident owner needs an ITIN for personal tax filings. Many non-residents form Wyoming or Delaware LLCs combined with an ITIN application.
The ITIN appears on Form W-9 (Substitute) given to banks, payment processors, and 1099-issuing payers. The CP565 letter is kept by the owner as proof. The ITIN also goes on the owner's personal Form 1040 or 1040-NR each year. Business filings (Form 1065, 1120-S, 1120) use the entity's EIN.
Sole proprietorships using the owner's ITIN open personal-style bank accounts at Capital One, Bank of America (branch), and Wells Fargo (branch). LLC and corporation entities open business bank accounts at Mercury, Relay, Brex, and most US banks using the entity's EIN.
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