Employer Identification Number (EIN) for Canadian Companies

Allan Madan, CA
 Feb 14, 2013
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Learn why and when a Canadian business is required to have an Employer Identification Number from the US.

Employer Identification Number

An Employer Identification Number (EIN) is required for Canadian companies that do business in the US. If you are a Canadian company that is connected to the US, even in a small way, make sure that you read this article!

What is an Employer Identification Number?
An Employer Identification number (EIN) is a number used to identify businesses whether they are sole proprietorships, corporations, partnerships, or other not personal entities. It is the US equivalent of a Canadian Business number.

There are various methods to obtaining an EIN. If you use the service of a competent tax professional, you could obtain it in as little as one day.

When are Canadian Businesses required to obtain an employer identification number (EIN)?
Some of the most common reasons Canadian companies would require an EIN are as follows:

  • To complete Form W8-BEN or W8-ECI as requested by US vendors or customers
  • Reduce or eliminate US withholding taxes on certain types of income (e.g. payments for services or goods sold)
  • Setup a US bank account
  • Setup a US PayPal account
  • Hire US employees or US subcontractors
  • Report all tax remittances to the IRS (e.g. income tax, payroll, etc.)
  • File a US business tax return
  • Claim an exemption under the Canada-US treaty from US income taxes on US business profits
  • Export goods across the border (US customs will ask for an EIN)

After Obtaining the EIN

Once your business obtains an EIN, you should carefully consider whether or not you are meeting all of the US tax filing obligations that comes with the number. Remember, that the reason you are obtaining an EIN is because you have business activities with US vendors or customers. This will most likely result in the Internal Revenue Service (IRS) assuming that your business is carrying on commercial activities in the US.

The implication of such position by the IRS means that your business may have tax filing obligations with Uncle Sam to report income related to US business activities on a US personal, corporate, or partnership tax return.

permanent establishment criteria in the United States

There is good news however. As long as your business does not have a ‘permanent establishment’ in the US, your income from US customers will not be subject to US tax (you will basically file a US tax return indicating that your business does not have a permanent establishment and therefore, is not liable for tax). If your business does have a permanent establishment, then all profit attributed to the permanent establishment will be subject to US tax. For more information on whether you may have a permanent establishment or not, please see this article on permanent establishment criteria in the United States.

As an international tax accountant, I highly encourage all businesses that may or may not have a US permanent establishment to file the appropriate US tax return. This provides several benefits as follows:

  • Once you file the tax return, that year becomes statute-barred after a few years (generally three years after you file the return). This means that after the appropriate period, the IRS cannot reassess tax or take other actions against your business regarding that year. If you choose not to file, the IRS can come back anytime (even ten, twenty years later) and request financial documents which you may have lost.
  • If your business does not have a permanent establishment, you can appeal to that fact which may exempt you from paying any US taxes on your US income. This option becomes very murky or even impossible if you do not file the return and the IRS comes knocking and requiring you to file the tax return. The IRS may then treat your business as having a permanent establishment and impose income tax regardless of your business’ degree of activities in the US.

Take Action Now

If your business will be or has already obtained an EIN, you should at minimum consider the following:

  • Am I or my company considered to be carrying on business in the US? If yes, you or your company may have US tax filing obligations
  • Do I or my company have a permanent establishment in the US? If yes, you or your company may have to pay US income taxes

We highly encourage all businesses with US activities and/or customers to carefully consider the above questions. The advice of a competent cross border tax professional should be sought.

We can assess if you or your company is carrying on business or has a permanent establishment in the United States.
Please contact us for a free consultation by using form below.





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Remember – It is always best to be proactive by voluntarily filing US tax returns. It is never a good idea to do nothing and take the chance that the IRS will not come after your business.

Disclaimer

The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.

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Comments 82

  1. Hi Lars,

    Thank you for sending in your inquiry.
    Applying online is the quickest alternative of receiving EIN from IRS. The other alternatives are applying by phone, mail, and FAX.

    Regards,
    Allan Madan and Team

  2. Hello Nicholas,

    You likely received a request to complete form W8-BEN because your company is providing services in the US to a US customer. If you do not complete this form, then your US customer will withhold 30% taxes from your payment.

    Before you can complete the W8-BEN Form, you will require an Employer Identification Number (EIN) for your company. The EIN must be clearly written on the form.

    In order to avoid paying the 30 % withholding tax, your company cannot have a fixed place of business (like an office) in the US and this must be clearly specified on the W8-BEN form.

    The completed W8-BEN form should be submitted to your US customer.

    Regards,
    Allan Madan and Team

  3. Hi Jacklin,

    To answer your question, I must first determine if your company has a permanent establishment in the US. Permanent establishment means ‘a fixed place of business’, like an office, or manufacturing plant.

    In general, the Canada-US tax treaty states that business profits earned in the US by a Canadian company are only taxable in the US, if the profits were earned through a permanent establishment in the US. For example, if your company maintained an office in the US, then your company would pay US income tax on the profits (sales less expenses) attributable to that office.

    Since your company is carrying on business in the US, it will require an Employer Identification Number (EIN).

    Regards,
    Allan Madan and Team

  4. Hi Nietzsche,

    If you get an EIN online, you can begin using your EIN immediately. However, it will take up to two weeks before your EIN becomes part of the IRS’s permanent records. So it is good idea to wait until this occurs before you file an electronic return or make an make an electronic payment.

    Regards,
    Allan Madan and Team

  5. Hi Taylor,

    As per the IRS website, you will have to acquire a new EIN if you are in any of the following situations:

    -You are subject to a bankruptcy proceeding.
    -You incorporate.
    -You accept partners and operate as a partnership.
    -You purchase or inherit an existing business that you operate as a sole proprietorship.

    Regards,
    Allan Madan and Team

  6. Hi Amit,

    You can obtain the EIN by calling the Business and Specialty Tax Line at (800) 829-4933 or by referring to the notice issued to you by the IRS when you applied for the EIN.

    Regards,
    Allan Madan and Team

  7. Hi Joanne,

    W-9 form is “Request for Taxpayer Identification Number and Certification”. It is normally completed when you employ someone or engage in a business relationship with a freelancer so that you have the information required to issue tax documents to the taxpayer and the IRS.

    Regards,
    Allan Madan and Team

  8. Hi Allan,
    I have a sole proprietorship business that is not incorporated. I will be working in the US temporarily in 2014. Will I need to obtain a EIN or the ITIN?

  9. Hi Neil,

    You will need to obtain the Individual Taxpayer Identification Number (ITIN) and file Form 1040NR to report your US income. You may be exempt from US tax liability under the Canada – US tax treaty if you are only in the US on a temporary basis.

    Best Regards,

    Allan Madan and Team

  10. Hi Gia,

    If your business structure changes you may need a new EIN. Please contact your accountant for specific information.

  11. I am a Canadian corporation not operating out of the US what do I put on the w9 form that I send to the Companies EIN number where the tin number asks

  12. Hi Kaylee,

    The W8-BEN form essentially allows you to eliminate the withholding taxes on services/sales made to US customers. This is done by using a provision in the tax treaty between Canada and the US.

    Specifically, you need to mention that you will take relief from the Article 7, paragraph 4 of the tax treaty.

    Best Regards,

    Allan Madan and Team

  13. I am filling out W8-ECI to my property management company and the form is asking for EIN. Must I obtain it before I provide the form to the company? They are asking for it ASAP

  14. You can try to submit the form without the EIN and see if the property management company accepts it. Sometimes they do. You can also call the IRS to obtain the EIN on the spot.

    Best Regards,

    Allan Madan and Team

  15. I have a small company in Canada.
    I had registered with IRS for EIN number few years ago and lost any documents.
    How can I search if it is still valid?
    Best Regards,

  16. Hi Jerry,

    You should contact the IRS by calling 1-267-941-1000 and requesting for the EIN information. They will ask few verification questions in order to determine that they are speaking with the appropriate person.

  17. Can’t the Canadian company fill in their Canadian tax ID number in the field for “Foreign tax identifying number, if any”? Is this not sufficient for the Canadian company to avoid the 30% withholding?

  18. I have a Canadian trust that must file a trust return in the US. What is the Tax Identification Number I need to report on the return?

    Thanks

  19. Hi Shamika,

    The Employer Identification Number is used to identify a business entity, including estates and trusts.

    Best Regards,

    Allan Madan and Team

  20. Hi Shamika,

    The Employer Identification Number is used to identify a business entity, including estates and trusts.

    Best Regards,

    The Madan Team

  21. As of May 2012, the online form is not available to non-U.S. entities. Just an FYI, since there are several suggestions to apply for the EIN online. From the IRS website: “If you were incorporated outside of the United States or the U.S. territories, you cannot apply for an EIN online. Please call us at 267-941-1099 (this is not a toll free number).”

  22. Hi there. I need to apply for an EIN number because we are a Canadian trucking company that does business with a trucking company based out of the US. On the application, question #10 it asks why I am requiring an EIN number. I’ve been told I’m supposed to check the box that states “Compliance with IRS withholding regulations”. Just wondering if this is correct. Thanks.

  23. Hello,
    Is a EIN/TIN also required to complete the W8-BEN-E form. Line 8 asked for a TIN, if applicable. As a small Canadian company selling goods to the US with no offices or employes outside of Canada require to get a TIN??

  24. Hi Eddy,

    Technically, an EIN is required since you are a business. You can easily obtain it by calling the IRS at 267-941-1000 and speaking with a representative that you need the EIN.
    Alternatively, you can also try submitting the W8-BEN-E to your client in the US. Some may not be as strict and accept the W8-BEN-E without the EIN number completed.

    Sincerely,

    Allan Madan and Team

  25. I have EIN number for my canadian corp. I am selling a property owned by corp. I have EIN number and have been filing taxes. Will they still withold 10% of gross sale

  26. I have an online store and will be doing International Sales/Shipping(Including the US). Do I need an EIN if I do not have a physical office within the US? The rules are a little vague.

  27. Hi Roger,

    By making sales into the U.S. market and shipping goods to the U.S. (where the title of the item passes in the U.S.), you may be considered to have a U.S. trade/business. In general, Canadian Corporation engaged in US Trade/Business will owe US tax if it has permanent establishment in the U.S (due to U.S.-Canada Tax Treaty protection). However, even if the Canadian business with income effectively connected with U.S. trade/business is not attributable to a U.S. permanent establishment (and hence, not subject to U.S. federal tax), it must still file U.S. tax returns to notify the IRS of the tax treaty position.

    See continuation of answer below

  28. Forms that are required to be filed are:
    – Form 1120-F – U.S. Income Tax Return of a Foreign Corporation in order to disclose sourced income
    – Form 8833 – Treaty Based Return Position Disclosure to disclose tax-treaty position and to claim relief from U.S. taxes under the Canada-U.S. treaty.
    Failure to file these returns may result in significant penalties and in losing the tax-treaty protection.

    Filing the forms mentioned above will require you to have an EIN. You can apply for an EIN online on the IRS website, via phone or faxing/mailing the Form SS-4. For more information, please visit http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN .

    Thank you.

    Sincerely,

    Allan Madan and Team

  29. Hi,
    We are a canadian company, based in Canada, about to provide a service to a US based research center. We have been asked to fill a W8-BEN form. From previous comments, my understanding is that we’ll have to mention “the Article 7, paragraph 4 of the tax treaty” (line 10, old W8-BEN) to claim a 0% withholding as we don’t have any physical location/activity in the US. Can you confirm this is right?
    Thanks.

  30. Hi John,

    you would refer article 7, paragraph 1.
    Also, as a Canadian corporation, you would fill out form W8-BEN-E instead of W8-BEN.
    Finally, if you are actually going down to the US to provide this service (and assuming that you don’t have permanent establishment), you would fill out Form W8-ECI instead of W8-BEN-E.
    Annually, it will be a prudent business practice to file an annual US corporate tax return reporting the income earned from your US client and indicating that due to the US Canada tax treaty, your income is exempt from US tax. The benefit of this is that after the return is filed, it will become statute-barred so that the IRS can’t come back 10 years down the road and question your income.
    Sincerely,

  31. Allan,

    I want to continue on the question asked by John on 2014-09-29, I have two questions related to Form W8-ECI http://www.irs.gov/pub/irs-pdf/fw8eci.pdf

    1. In Form W8-ECI, do I need to fill item 6 Business address in the United States if I do not have permanent establishment in US?

    2. In Form W8-ECI, there is no item such as item 10 in Form W-8BEN,
    “Special rates and conditions (if applicable—see instructions): The beneficial owner is claiming the provisions of Article
    of the treaty identified on line 9 above to claim a % rate of withholding on (specify type of income):
    .
    Explain the reasons the beneficial owner meets the terms of the treaty article”.

    Do I need to add such note to From W-8ECI? Thanks,

  32. We are a Canadian company selling goods to US. One of our US customers asked us to send a copy of W9 which we don’t have. Do we need one and if so, were do we get it?
    Thank you

  33. Dear Gabriel,

    To answer your question, your company will need to obtain a Employer Identification Number (Business Number equivalent in the US) with the Internal Revenue Service before you can complete the form W9.

    As professional, we can assist you with the preparation of Form SS-4 which is used to apply for the Employer Identification Number (EIN). It should take approximately 2-3 weeks after the application for you to obtain the EIN. In the meantime, you can tell your US Customer that you have applied for the EIN.

    Our fee is $100 + applicable taxes. Please let us know if you’d like to proceed.

    Sincerely,

  34. Dear Kevin,

    1) If you do not have an office in the US, you can leave that space blank.

    2) You do not need to add such note to the W8-ECI. Since by providing the W8-ECI form to your US client you are confirming that you are providing service in the US, the client will not withhold any tax. However, by filing this form, you will be required to file an annual US tax return whether your business has any US tax liability or not.
    The Form w8-BEN does require the % and treaty article explanation since these are normally used for businesses that are providing services in a foreign country for US clients. In this instance, unless there is a specific tax treaty provision, US businesses are required to withhold certain amount of taxes from their payments to non-US businesses
    I would assume that your business already has a EIN # to file the form W8-ECI. If you’d like to discuss issues regarding your business’ US tax liability and permanent establishment issue.

  35. Dear Allan – I’m trying to determine the process for obtaining an EIN for a Canadian charity seeking exemption in the US under the US Canada income tax treaty. In my experience, when applying for an EIN, one must enter either the SSN of an officer/director or the EIN of an existing business applying for an EIN.

    My question is how does one apply for the EIN if the individual working for the Canadian charity is a Canadian citizen (thus no SSN) and there is no existing business with an EIN to use for purposes of the application?

    Many thanks in advance for your assistance.

  36. I have a small business in Canada (a corporation). I am the owner and the director and the only employee. Earlier this year (2014), I published a book though Create Space, Kindle , and Smashwords and I obtained an EIN to avoid 30% tax withholding on my royalty income. Now, I want to close my EIN because my book is not selling and there is no point keeping it and waste time/money on filing taxes etc . (I will be closing my Create Space, Kindle, and Smashwords accounts as well.)
    How would I go about closing my EIN? What’s the procedure and what reasons would be appropriate to quote for closing my EIN? Thans so much.

  37. Hi Sara,

    Based on our experience with filing the Form SS-4, if the officer/director does not have a SSN or ITIN, they would just indicate “NRA” on the box and the IRS had no issue with it.
    Sincerely,

  38. Hi Viki,

    Hello,

    Technically, once a EIN is issued, the number cannot be cancelled. However, you can close your business account with the IRS to let the US government know that your business will no longer have US activity.

    We can assist you with the application. Please note that your US tax filing must be up to date in order to close your business account and any tax liability must be fully satisfied.

  39. I am a non profit charity camp located in canada. we receive payments for camp to a US bank located in the US. We also receive credit card payments through a company in the US. They are asking to fill out a W9 form. If I am a charity in canada, would my status be a tax exempt organization or a limited liability company?

  40. Hi Dina,

    Hi, as long as you are a registered charity with the tax authority, you should be a tax exempt organization and not a limited liability company.

    Best Regards,

    Allan Madan and Team

  41. Hi,
    We have a registered Canadian Partnership here in BC. We wan to import products to sell on Amazon.com.
    I have filled in an SS-4 Application for Employer Identification Number (EIN) and faxed it in.
    From what I have read it appears that is what we need to then fill in a W-8IMY for Amazon.com so they won’t withhold 30% taxes.
    Am I correct? The information is very confusing and we want t do it right.

    Thank you a TON!

    Margaret & business partner

  42. Hi Margaret,

    Please complete form W8-BEN in order to avoid paying a 30% tax on payments received from US customers / payers.

  43. Hi Allan,

    I have been asked to fill out a W-9 for my video content a US customer is licensing. I am a Canadian citizen and am just wondering if this is the correct form? As I am just a freelancer and not an incorporated company I wasn’t sure it was necessary.

    Thank you!

  44. Hello,
    I am an independent contractor. I do work for a US company but I have only worked in Canada. I have not done any actual work in the US as of yet. They pay me in US dollars. Do I need a EIN? Is it okay to fill out the W9 or is that going to cause me problems? Thank You

  45. Hi Tracy,
    Your company will need an EIN and must also complete form W8-BEN-E. Otherwise, your company’s US clients will holdback 30% from payments made. We can obtain an EIN for your company and also can complete form W8-BEN-E.

  46. currently, we are having business with usa company. We export the products to them. They need us to help them to custom clearance when the product arrive to usa. We know that we need to have EIN in order to process it. Will it affect our tax return in the end of year? Do I need to pay the tax to usa government? Do we need to fill in the form W8-BEN?

  47. Hi Karen,

    Yes, your company requires an EIN and form W8-BEN-E must be completed so that your customer does not deduct taxes from payments made to your company.

    Each year that your company is doing business in the US, it will have to file a US Corporate Tax Return (1120-F) and attach a Statement (form 8833) to claim an exemption from US corporate income tax. This assumes that your company does not have a permanent establishment in the US.

  48. Hi,
    We are an incorporated company being asked to do programming work for a US software company. I understand will will need an EIN. My business partner who resides in the States, has not done any work for us in the past with an American organization is potentially making the arrangements and doing some preliminary work as an individual (not representing our company). He will probably be supervising work online being performed in Canada. too. However, I am a wary of him doing any work with the possibility the IRS considers his residence a branch office or a Permanent Establishment for our Canadian company. Am I right to assume that is likely and have to be prepared to file a US tax return? If not and we are in the clear, then am I also to assume we would only need a W8-BEN form? Thank you

  49. Hi Derrick,

    Thanks for your question. Your company will require an EIN and form W8-BEN-E must be completed in order to stop withholding taxes from being deducted on payments made to your company.

    So long as your company does not have a physical office in the US, and your ‘partner’ is not acting in the capacity of an agent or employee of your company in the US, then your company will not have a permanent establishment in the US. A permanent establishment in the US will cause US taxation on business profits earned from that establishment.

  50. my wife and I are considering a move to BC. She will remain an employee of a US company. Her work requires her to login and and do work on servers in southern california – thus work that she is doing in on the server in the US and not work done in Canada – is she exempt from canadian tax on the us income earned?

  51. Hi Mo,

    Since your wife is physically working in Canada, she will have to pay Canadian income taxes on the employment income earned in Canada. It doesn’t matter that the servers are physically located in the US. Her US employer must also register for a Canadian payroll number, deduct Canadian payroll taxes from her paychecks and issue a T4 (employment income slip) to her by February 28 of the following year. Your wife will also have to file a Canadian tax return.

  52. Is she then exempt form US taxes? If not – how do we avoid double taxation? The Canadian taxes are higher than her US taxes so we would only owe to Canada, yes? What about State taxes owed – since she is not working in any us state?

  53. I require an EIN as I am setting up to sell books on iTunes. Reading the IRS website, it looks like I need an ITIN as an individual and then an EIN as I am incorporated as a service company in Canada and my slef-publishing company is owned by my parent corp. Is that the case – that I apply for an ITIN individually and then I can apply for the EIN. Thanks! Great website and info. Easy to use.

  54. Hi Hasmi,

    You do not need an ITIN unless you have a personal tax filing obligation in the US. If your self publishing company is formed in the US, then it will require an EIN. On the other hand, if your Canadian corporation is doing business in the US directly, then it will require an EIN. We can apply for an EIN on your behalf.

  55. Hello Mr. Madan,
    Hope you are doing well.

    I have quick questions :

    1. Do I need to obtain EIN if I have an online retail store based in Canada and sell my products to the customers in the US?
    2. Do I have to open an additional US $ banking account or I am fine with CAD $ account only?

    Thank you in advance?

  56. Hi Ilkin,

    Unless you are requested to provide an EIN by a vendor, merchant services provider, customer, etc., you do not require one. You can use a Canadian bank account to collect payments from your customers.

  57. Hello,
    We are a Canadian corporation, fabricating steel in Canada for US projects. We do not have a physical location in the US. Last year we Incorporated in the US under a different name, and have not yet activated that company, so currently it exists in name only.
    1. How can I verify the EIN number we have is for our Canadian Corporation vs our US Incorporated company?
    2. Which W8 form do we need to complete for the US companies for whom we fabricate steel? (we deliver that steel to the US job site).
    3. Are there any other tax forms we need to complete?
    Thank you!

    1. Hi, Mary
      Thanks for your questions. My responses are as follows.

      1. The name of the company associated with the EIN should be listed on form SS4 (application for EIN). Alternatively, you can call the IRS and provide them with the EIN that you have.

      2. Yes, complete form W8-BEN-E for your US customers.

      3. A US corporate tax return (foreign), 1120-F, should be completed for your Canadian corporation. Attach form 8833 to this Return to claim an exemption from US corporate income taxes. Also, complete a US Corporate Tax Return, 1120, for your US corporation.

      We can help you with all 3 items above.

  58. Hi there. I need to apply for an EIN number because we are a Canadian trucking company that does business with a trucking company based out of the US. On the application, question #10 it asks why I am requiring an EIN number. I’ve been told I’m supposed to check the box that states “Compliance with IRS withholding regulations”. Just wondering if this is correct. Thanks.

  59. “Hello Allan,

    I’m starting a online business that consist of selling goods on Amazon.com (USA). It is call FBA. I ship directly from Asia to US (without coming to Canada) and the goods are store in the Amazon warehouse. Products are sell to US customers.
    What do I need to be legit/legal? What is the best for this situation? LLC? EIN? INC?

    Thank you
    Marco”

    1. Hi Marco,

      “Thanks for your questions. I assume that you are living and working from Canada. If this is true, then I suggest that you open a Canadian corporation and register it with Amazon. All sales will be recorded by your Canadian corporation. You will likely need an EIN for your Canadian corporation to setup up with Amazon.

    1. Hi, Ali. Our fee to obtain an EIN for your company is $150 CAD plus disbursements and taxes. Once you are ready to proceed, I will send a checklist of information that I need from you.

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