Must-See for Doing Business in the U.S.! Full Analysis of Tax ID Requirements for General Company Registration

Understanding the EIN A Must-Know for Doing Business in the U.S.

As global economic integration deepens, more and more Chinese companies and entrepreneurs are setting their sights on the U.S. market. Whether selling products through e-commerce platforms or establishing a physical presence in the U.S., registering a company is the first step toward conducting business. A key requirement in this process is obtaining an Employer Identification Number EIN, a crucial document for U.S. business operations.

What is an EIN?

EIN stands for Employer Identification Number - a unique identifier assigned by the Internal Revenue Service IRS to businesses operating in the U.S. Similar to a personal Social Security Number SSN, an EIN serves as a company’s official identification. Regardless of whether a business has employees, it typically needs an EIN to conduct commercial activities in the U.S. This number is essential for filing taxes, opening bank accounts, obtaining business licenses, and collaborating with suppliers or clients.

Why Is an EIN Required When Registering a Company?

According to IRS regulations, most business structures - including Limited Liability Companies LLCs, Corporations, and Partnerships - must obtain an EIN upon formation. Even Sole Proprietorships may need an EIN if they hire employees or have a retirement plan.

The EIN is widely used in the following scenarios

Filing federal and state tax returns with the IRS

Opening a U.S.-based business bank account

Applying for a state business license

Hiring employees and reporting payroll taxes and social security contributions

Signing contracts with vendors and clients, and building business credit

In recent years, several Chinese companies investing in the U.S. have faced business disruptions due to delays in obtaining an EIN. For example, in July 2025, a tech company from Shenzhen registered a subsidiary in California but was unable to open a business bank account or execute contracts with local clients due to a lack of EIN. These cases highlight that an EIN is not only a legal requirement but also a foundation for smooth business operations.

How to Apply for an EIN

Obtaining an EIN is straightforward and can be done through the following methods

1. Online Application Recommended

The IRS offers a free, fast, and convenient online EIN application system for most business types. Applicants must provide basic company information such as business name, address, owner details, and organizational structure. The entire process typically takes just a few minutes, and the EIN is issued immediately upon completion.

2. Mail or Fax

For those unable to apply online, Form SS-4 can be completed and submitted by mail or fax. However, this method may take 4 to 6 weeks for processing.

3. Phone Application For Non-U.S. Residents

The IRS provides an international toll-free hotline for non-residents to apply for an EIN over the phone - a common method used by Chinese companies without a U.S. contact.

Importantly, applying for an EIN is completely free through any of the above methods. However, once issued, the EIN must be kept secure and used correctly across all tax and business documents.

Which Businesses Must Obtain an EIN?

While most businesses require an EIN, there are exceptions. For instance, sole proprietors without employees may use their SSN for tax purposes. However, using an EIN is still recommended for privacy and professionalism.

Foreign companies establishing branches or subsidiaries in the U.S., including Chinese sellers on platforms like Amazon or eBay, must also obtain an EIN to comply with platform and tax requirements.

EIN vs. SSN vs. ITIN

In addition to the EIN, the U.S. has two other tax identification numbers

SSN Social Security Number Issued to U.S. citizens and authorized residents for personal tax and social security purposes.

ITIN Individual Taxpayer Identification Number Issued by the IRS to individuals who do not qualify for an SSN but need to file U.S. taxes.

For foreign companies, the EIN is used at the business level, while individual owners or representatives may need an ITIN if they are required to file personal tax returns in the U.S. These numbers serve different purposes and can coexist.

Key Notes and FAQs

1. EINs cannot be changed or transferred. If a company undergoes a significant structural change - such as converting from an LLC to a C Corporation - a new EIN may be required.

2. No annual renewal is needed. Unless there is a major change e.g., company name or responsible individual, no updates are required with the IRS.

3. EINs are permanent. Even if the business closes, the number remains unique and will never be reassigned.

4. Use EIN only for business purposes. It should not be used for personal identification or tax filings.

Conclusion

For any Chinese company or entrepreneur planning to enter or expand in the U.S. market, understanding and obtaining an EIN is essential. Whether engaging in physical commerce or cross-border e-commerce, the EIN is a critical tool for tax compliance, banking, licensing, and building business relationships. Ensuring timely and correct EIN registration is a vital step toward successful U.S. market entry.