Federal Tax ID (How does Infosys work?)

[sameer_n]

I have talked to few attorneys regarding the incorporation of a company. On the following issue, I received contradicting legal advice and I call for learned people on the forum to throw some light or guide me to the truth...

I am a canadian PR, who is planning to start a company in US and hire US citizens to work for it. I don't have SSN and when I asked about the federal tax ID that needs to be obtained from IRS in order to pay the taxes to the govt, few attorneys said I need to obtain SSN in order to get federal tax id and others said there is no need for SSN. I am confused with this contradiction and don't know which camp to believe. Does one need to have SSN to operate a company in US?

My logic says that I don't need to have SSN. Because, I guess Infosys, Wipro or TCS operate in US without the requirement of a US citizen working for them or SSN for the founders!! Does any one know whether Infosys pays taxes to the US govt or they only pay to Indian govt? If they pay taxes in US, then they would definitely need fed tax id, which in turn would need SSN for the founder/CEO (according to one camp of attorneys).. Can somebody share their views on this? Thanks a ton in advance.

Sam

 

[sameer_n]

http://www.irs.gov/businesses/small/article/0,,id=98350,00.html

Thanks for the link, JoeF

Every company that operates in the US needs an employer id aka tax id. An officer of the company has to apply for one. Since every officer of a company in the US has to have work authorization, it is obvious that the officer who applies for one has a SSN.

So according to your opinion, the officer need not be an investor, shareholder in the company!?! Anybody who is currently working for the company can be pushed for getting a tax id? I have gone through the booklet "understanding your EIN" on IRS website.. It asks to enter the SSN of primary officer of the company. Who is a primary officer? What if he leaves the company as soon as I get the EIN/fed tax ID? Would the EIN I have obtained for my company through him still be valid even after he leaves?

Even companies with foreign headquarters (like Infosys etc.), if they have a US branch, have officers with work authorization in their US branch.

In suppliment to my question in the above, I would guess that Infosys has to pay a good amount of profit to the officer who is helping it to get the fed tax id... In case the primary officer needs to be an investor then he could potentially own the US operations of Infosys!! Why would it want to share its profits with somebody just because he has an SSN!? Ofcourse, unless and otherwise they can't do business without it.. But somewhere I feel that SSN may not be a hard and fast criterion (line 7b always asks for SSN though).. Please comment

One of the attorneys mentioned about having International ID number instead of SSN! Have you heard of it? What exactly is International ID number?

I once again thank JoeF for sharing his views on my issue...
Sam

 

[sameer_n]

Thanks for the interesting discussion JoeF...

When you say Officers and Shareholders are two different entities, I totally concur with you. According to my knowledge, an officer NEED NOT own anything in the company and he gets paid for his work/services and that's it. But what I don't see here is using the SSN of the officer to whom the company doesn't belong to in the SS-4 form!! So coming to my issue, as I am a canadian PR, I can hire somebody who has an SSN then apply for EIN/fedID and I can fire him without ever having to lose the EIN?!? Am I getting this correct? or since his SSN is used to get EIN, the company belongs to him!?!?!?!!? What kind of liabilities exist for the officer with regards to the company?

One of the attorneys mentioned about using International ID instead of SSN! Have you heard of international ID before? Could you please comment on this? Thanks again for your time and input.

Sam

 

[sameer_n]

Hi JoeF, Thanks for the inputs.. I have contacted IRS customer service in order to find out about the requirement of SSN. They have informed me that instead of SSN, I could send in the photocopy of my passport. I think SSN is not a compulsory requirement and I will let you know if I am able to proceed without SSN.

Well, if you are not an officer for the company, you can't just hire and fire anybody.

I know I am not very knowledgeable in operating a company but I didn't think I am bad either... I am just wondering that in the capacity of the owner of the company can't I hire or fire anybody? I don't think I need to have work authorization for that!?! Ofcourse, you might point out that the president is also an officer...!! But in my earlier post, I wanted to know whether as the owner of the company can't I hire and fire personnel...

Maybe the lawyer meant a tax id. It is nowadays hard to get a tax id, though.

Why do you think getting a tax id is hard as opposed to EIN? Any particular reason?

JoeF, I thank you once again for the informative inputs and I look forward to hear your comments on the above..

Sam