All immigrants regardless of legal status are able to earn a living as independent contractors, or start a business using an ITIN, EIN, or SSN. ITIN is an Individual Taxpayer Identification Number primarily used by individuals to file tax returns, report income, and fulfill tax obligations. It enables individuals, including workers without work authorization, to comply with tax laws, conduct a business and open a bank account.
An Employer Identification Number (EIN) is used by employers and/or in this case people registering as an LLC to start a cooperative by providing them with a unique identification number for their cooperative entity in order to file taxes.
ITIN: Available to anyone regardless of immigration status
Business Licenses have been a major barrier for people without work authorization to be able to work. If you work for yourself anywhere in California, you need to get a business license for the city or county where you’re working. Up until 2018, many cities and counties in the state required a social security number to get a business license, which made getting one impossible for people without work authorization. But in 2018, a law called AB 2184 changed that – now, anyone can get a business license with an individual taxpayer identification number (ITIN), a driver’s license or state ID number, or a municipal ID number.
Individual Taxpayer Identification Number (ITIN)
- The Internal Revenue Service (IRS) issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain, a Social Security number (SSN).
- ITINs allow individuals ineligible for an SSN to
- (1) report their earnings to the IRS,
- (2) open interest-bearing bank accounts with certain banks and,
- (3) conduct business in the U.S.
- The IRS issues ITINs regardless of immigration status, because both citizens and noncitizens may have a U.S. tax filing or reporting requirement under theIRS.
- ITINs are intended primarily to facilitate federal tax reporting. An ITIN does not authorize work in the U.S. or provide eligibility for Social Security benefits or the Earned Income Tax Credit.
EIN: Allows people with an ITIN to create an LLC
An Employer Identification Number (EIN) is a 9 digit number you need to obtain in order to register as an LLC. Similar in purpose to the ITIN assigned to individuals, EINs are used by employers, sole proprietors, corporations, etc, or in this case cooperatives.
business entities. A SSN or ITIN may be used to get an EIN.
After you have completed steps like naming your business, preparing and submitting the articles of organization to the Secretary of State, and preparing an operating agreement, you then can obtain an Employer Identification Number (EIN) from the IRS for your new LLC.
According to the IRS, you will need an EIN if you answer “Yes” to any of the following questions:
- Do you have employees?
- Do you operate your business as a corporation or a partnership?
- Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms?
- Do you withhold taxes on income, other than wages, paid to a non-resident alien?
- Do you have a Keogh plan(self-employed retirement plan)?
The EIN will allow your new LLC Coop to:
- Open a bank account
- Pay taxes – reporting income, deductions, and other financial information to the IRS.
- Hire employees- issue W-2 forms for tax reporting
- Obtain Business Permits and Licenses
- Establish Business Credit
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