Silicon Valley Legal Bible(30): Social Security Number(SSN) Employer Identification Number(EIN)
Registering a company in the U.S. often hits a major roadblock: the SSN. Without an SSN, even after incorporation, operating a U.S. business becomes nearly impossible. For U.S. residents, SSNs are routine, but for overseas startups, obtaining one feels like climbing a mountain. What exactly is an SSN? Why is it indispensable for U.S. company registration? How can foreign businesses resolve the SSN hurdle?
Today, we break down the SSN.
The Silicon Valley Codex: 42 Chapters, a legal encyclopedia tailored for founders. I’m Liu Xiaoxiao, a U.S. attorney in Silicon Valley, here to decode the legal logic behind entrepreneurship.
1. What Is an SSN?
The Social Security Number (SSN) is a nine-digit identifier issued by the U.S. federal government to three groups:
a. U.S. Citizens: Those holding U.S. passports.
b. Permanent Residents: Green card holders.
c. Temporary Residents: Individuals on work visas (e.g., H1B, L1) or student visas (F1).
Most overseas entrants obtain their first SSN through employment—whether as a Teaching Assistant (TA), Research Assistant (RA), or via a job offer. With an offer letter, you can apply for an SSN at a Social Security Office.
Is an SSN equivalent to a Chinese ID card? No. SSNs are far more confidential. Americans memorize their SSNs and rarely share them openly. Unlike IDs, SSNs are not carried daily and are disclosed verbally, not via email or text.
So it should be said that the SSN has no complete counterpart in China.
2. Related Concepts
2.1 Employer Identification Number (EIN)
The first concept is EIN, which stands for Employer Identification Number, also known as the Federal Tax number, which is the number a company uses to file its taxes.
2.2 Individual Taxpayer Identification Number (ITIN)
The ITIN is for individuals without an SSN (e.g., foreigners). However, ITINs are rarely used because:
U.S. residents already have SSNs.
Non-residents rarely file U.S. taxes.
Applying requires mailing your passport to the IRS, risking loss and delays.
2.3 Social Security Number (SSN)
The SSN serves as the primary tax ID for most U.S. residents.
How are these connected? To apply for an EIN, you must link it to an individual’s SSN (or theoretically, an ITIN). But since ITIN holders are scarce, 99% of EINs rely on SSNs.
Note: While U.S. company registration doesn’t require an SSN, opening a bank account does—via an EIN. Skipping the SSN delays EIN approval from 4-8 weeks to 6 months.
3. Responsibilities of an SSN Provider
Then everyone is more worried about the provider of the SSN. What kind of person can be the provider of the SSN? After I provide the SSN to help the company apply for the Employer Identification Number (EIN), will everyone see my SSN? If I provide the SSN, will I also be implicated if there are any tax problems in the company later?
Let's answer these questions one by one.
3.1 Who Can Be an SSN Provider?
Let's first look at how the person who provides the SSN is defined by the IRS. This person's position is called the Responsible Party. The Responsible Party is defined by the IRS as:
Is this like China’s “legal representative”? No. The U.S. has no equivalent to China’s legal representative (a government-registered individual with full authority). The Responsible Party is tax-specific and holds far fewer liabilities.
3.2 Is Providing an SSN Equivalent to Public Disclosure?
You can be completely assured of this. In the process of applying for an Employer Identification Number (EIN), SSN is only filled in during the process, and the final product is an Employer Identification Number (EIN). No one can find out who the SSN provider is through a company's Employer Identification Number (EIN), and no one can find out how many companies' Employer Identification Numbers (EIN) are registered under your name through your SSN. Therefore, as a provider of SSN, you can be completely assured of confidentiality.
3.3 Liability of an SSN Provider
Will I be liable for the company’s tax issues? No. Companies are limited liability entities. Shareholders, directors, or SSN providers aren’t personally liable. However, the IRS will contact you first if issues arise—costing time and hassle.
But I trust you, visionary founders watching this, will steer clear of such troubles.
The Silicon Valley Codex: 42 Chapters, a legal encyclopedia tailored for founders. I’m Liu Xiaoxiao. See you next time.
