ITIN vs SSN for LLC owners on different visa types

Social Security Numbers (SSNs) are issued to individuals who are authorized to work in the United States. Visa types that typically qualify for an SSN include H-1B, L-1, O-1, E-1, E-2, F-1 with work authorization (OPT/CPT), J-1 with work authorization, and green card holders. B-1 and B-2 visa holders generally do not qualify for an SSN because they are not authorized to work. If you cannot get an SSN, you will need an ITIN for tax purposes.

An Individual Taxpayer Identification Number (ITIN) is issued by the IRS to individuals who need a U.S. tax identification number but are not eligible for an SSN. To apply, file Form W-7 (Application for IRS Individual Taxpayer Identification Number) along with a federal tax return and documentation proving your identity and foreign status. You can apply through an IRS Certifying Acceptance Agent to avoid mailing original documents. Processing typically takes 7 to 11 weeks.

For tax filing purposes, both an ITIN and SSN work equally well. You can use either to file your personal tax return and report LLC income. However, an ITIN cannot be used for employment purposes, and it does not confer work authorization. For your LLC, you will also need an EIN (Employer Identification Number), which is separate from your personal ITIN or SSN. The EIN identifies the LLC for tax purposes.

Opening a U.S. bank account with an ITIN can be more challenging than with an SSN. Many banks prefer SSNs, but several major banks accept ITINs for personal and business accounts. When opening a business bank account for your LLC, the bank will require the LLC's EIN and your personal identification (ITIN or SSN). Having an ITIN may limit your options for certain financial products such as credit cards or loans.

If you later change to a visa status that authorizes employment (such as moving from B-1 to H-1B), you will become eligible for an SSN. Once you receive your SSN, notify the IRS to consolidate your tax records by writing to the IRS ITIN Operations unit. All tax returns previously filed under your ITIN will be linked to your new SSN. You should stop using the ITIN once you have an SSN.

Regardless of whether you have an ITIN or SSN, your LLC needs its own EIN. You can apply for an EIN online through the IRS website if you have an SSN, or by fax or mail using Form SS-4 if you have an ITIN or no U.S. tax ID yet. The EIN is used for filing LLC tax returns, opening business bank accounts, and hiring employees. It is separate from your personal tax identification number.