If you run a U.S. business from Pakistan – an LLC, a freelance setup, or something in between – this question comes up eventually. Do you need an ITIN to use Stripe or PayPal? Or is your EIN enough?
Honest answer: it depends on your setup. But getting it wrong doesn’t just mean paperwork trouble. It can mean losing 24% of money you’ve already earned. Know where you stand before a platform tells you.
Do Stripe and PayPal Actually Require an ITIN?
An ITIN is a personal tax ID issued by the IRS. It’s for people who can’t get a Social Security Number but still have U.S. tax obligations. If you’re a Pakistani national running a U.S. business, that almost certainly applies to you.
What most people miss is that Stripe and PayPal don’t just need information about your business. They need information about you – the actual person behind the account. U.S. tax law requires it. The ITIN is how you confirm your personal identity to them.
PayPal’s Position: ITIN from the Start
PayPal doesn’t give foreign account holders much time to work this out. If you have a U.S. PayPal account – connected to a U.S. bank and a U.S. business entity – PayPal has to verify your personal tax identity.
No valid personal TIN on file means backup withholding kicks in. That’s 24% taken from your payments once they cross $600 in a year. The IRS sets this rule. PayPal applies it.
Say you’re pulling $5,000 a month through U.S. PayPal. Without an ITIN, $1,200 of that gets withheld every single month. Not blocked temporarily – withheld. The clock starts at $600 and there’s no grace period.
Stripe’s Position: Lenient at First, Strict Later
Stripe feels more forgiving early on. When you register as a U.S. LLC representative, your EIN is usually enough to get through initial onboarding. You’re not asked for a personal TIN right away, which can make it feel like the ITIN question is already resolved.
It isn’t.
As your payment volume grows – especially once you cross $500,000 in annual processing – or if IRS verification gets triggered, Stripe will ask for a personal TIN from the individual owner. For Pakistani nationals, that means an ITIN.
The real risk with Stripe’s setup is that it lets you build a working business first. By the time the requirement surfaces, you could be processing serious volume. A 7 to 11 week IRS wait doesn’t work when your business depends on payments clearing week to week.
PayPal demands the ITIN from day one. Stripe gives you runway, but the destination is the same. Get it sorted before the platform asks.
Compliance Scenarios for Pakistani Business Owners
How this plays out depends entirely on how your business is structured. The tax rules differ depending on whether you’re working through a U.S. entity or operating as a foreign individual, and both situations need to be understood separately.
U.S. LLC with PayPal vs. Pakistani Business with PayPal
This is where a lot of Pakistani founders get tripped up.
If you run a Pakistani business and use a non-U.S. PayPal account, you’d submit a Form W-8BEN. That tells PayPal and the IRS you’re a foreign person. Different rules apply, and no ITIN is required.
But the moment you register a U.S. LLC and open a U.S. PayPal account under it, that changes completely. You’re no longer an offshore business. You’re a U.S. business operator. The W-8BEN that worked before doesn’t work now.
This catches a lot of founders off guard. You form the LLC to get U.S. business status – which is exactly what happens. That status comes with U.S. compliance rules, and the ITIN is part of that. Assuming a W-8BEN still covers you after forming a U.S. LLC is one of the more expensive mistakes you can make.
Freelancing for U.S. Clients and 1099 Reporting
If you freelance directly for U.S. clients without any U.S. entity behind you, things are simpler. U.S. clients may still issue a Form 1099-K if your payments cross $600 in a year, and they’ll ask for your tax information. As a foreign individual with no U.S. presence, a W-8BEN covers you. No ITIN needed in most cases.
The complication comes when you’ve been presenting yourself as operating through a U.S. structure, even loosely. Clients who aren’t sure of your status sometimes default to 24% withholding rather than take the compliance risk on their end. Having an ITIN on file removes that ambiguity and protects your cash flow in a straightforward way.
Why You Can’t Just Use an EIN
This is probably the most common misconception among Pakistani founders who’ve just set up a U.S. LLC.
An EIN identifies your business. An ITIN identifies you. They were built for different purposes and neither replaces the other.
When Stripe or PayPal processes payments through your account, they’re not just tracking the entity. They need to identify the real person who controls that entity – for 1099-K reporting, backup withholding rules, and IRS beneficial ownership requirements. Your EIN doesn’t tell them any of that.
There’s a lot of advice targeted specifically at Pakistani and NRP founders suggesting that an EIN is all you need for U.S. payment accounts. That advice is incomplete. The EIN handles your business taxes. The ITIN handles your personal identity within the U.S. tax system. Both need to exist, and both need to be on file with your payment processor.
Questions Pakistani Founders Actually Ask
Can I use my EIN instead of an ITIN for Stripe or PayPal?
No. An EIN is your business tax ID. Stripe and PayPal also need a personal TIN for the individual who owns the account when U.S. tax reporting applies. For foreign nationals, that personal TIN is an ITIN. One doesn’t cover what the other is supposed to do – they’re separate IDs serving separate purposes.
What actually happens if I don’t have one?
On PayPal, backup withholding starts once qualifying payments cross $600. That’s 24% taken from money you’ve already earned. On Stripe, you may not hit a wall immediately – but as your volume grows, verification restrictions can appear without much warning. Either way, once the gap is flagged, you’re looking at a 7 to 11 week IRS processing window before it’s resolved. Your payments don’t pause while you wait.
Does having an ITIN affect my immigration status?
No, not at all. An ITIN is a federal tax ID and nothing else. It has no connection to visa applications, immigration status, or work authorization. It exists purely for U.S. tax purposes.
How long does it take to get one from Pakistan?
Standard IRS processing is 7 to 11 weeks from the date your application arrives. The most reliable route for Pakistani applicants is through a Certifying Acceptance Agent (CAA). Your original documents don’t need to leave Pakistan and there’s no U.S. embassy visit involved. See the 3 reasons why Pakistani LLC owners specifically choose CAA-based ITIN applications to avoid sending their original passports to the U.S. [link to ITIN for Stripe and PayPal owners]. If you’re ready to move forward, [Xpezia’s ITIN service – link] works through the CAA process with Pakistani founders directly.
My Stripe volume is still low. Do I really need an ITIN now?
Stripe may not ask for it yet. But the requirement doesn’t disappear just because it hasn’t been triggered. Building a growing business on Stripe without an ITIN and then hitting a verification wall mid-growth is a much harder position than applying early. The 7 to 11 week wait doesn’t get faster just because your situation is urgent.
Before you close this tab, open your Stripe or PayPal account and check your tax settings. Look for the 1099-K section and see what TIN is listed for the account owner. If there’s only an EIN and no personal TIN attached, that’s the gap worth fixing – before a payment hold makes it urgent.
The ITIN process isn’t complicated. It’s mostly just waiting. But you can’t start the clock until you apply, and the best time to apply is before you need it.