Can I Get an EIN Before LLC?: Everything You Need to Know
Can I get an EIN before LLC? There are reasons to wait until your limited liability company is formed before obtaining an Employer Identification Number.4 min read
2. What's a Responsible Party?
3. Incorporating Your Business
4. What's an EIN?
5. Do I Need a Federal Tax ID (EIN) Before Forming an LLC or Incorporating?
6. How To Obtain an EIN for Your LLC?
Updated November 9, 2020:
Can I get an EIN before LLC? There are two main reasons to wait until your limited liability company is formed before obtaining an Employer Identification Number. First, it is important to ensure that the name of your business was properly registered and not rejected. Second, when applying for an Employer Identification Number, the IRS will request the exact legal name that was approved and the date that the business was formulated.
What's an LLC?
A limited liability company (LLC) is an organizational entity that provides both the pass-through taxation of a sole proprietorship or partnership and the liability protection of a corporation. Today, LLCs are the most popular type of business in the United States. This business structure protects an owner‘s personal assets while allowing company profits to be claimed on a personal tax return. LLCs offer numerous taxation options. For example, businesses can be taxed similar to an S corporation or sole proprietorship.
What's a Responsible Party?
An individual who has authority over the assets or funds in the business is referred to as a responsible party. This individual has the ability to direct, control, or manage the entity either directly or indirectly. The owners of an LLC are referred to as members. An LLC may have numerous owners, however, a single individual must be selected as the responsible party to obtain a Tax ID Number (TIN) for the LLC. To clarify, it is permissible for an LLC to have multiple owners. However, only one member can be designated as the responsible party in charge of obtaining the TIN for the LLC.
Incorporating Your Business
To form an LLC or incorporate a business, you will need to register your company with your state. During registration, it is necessary to name a registered agent. This individual will be responsible for receiving and sending official company documents. A registered agent must hold a physical address in the state. A P.O. box is not permitted.
If you are planning on selling stock, be prepared to answer questions about the company‘s stock options. For example, you will need to know how many shares of stock will initially be available. At this time, you will be required to complete the incorporation application. This form can be completed online or sent in via mail.
There is a fee associated with the incorporation application. This can be paid for through a business checking account or by a personal credit card or checking account. Reimbursement may be an option if paying by personal financial methods.
What's an EIN?
The Internal Revenue Service (IRS) uses a nine-digit number to monitor the tax requirements of a legal entity. This number is referred to as an Employer Identification Number (EIN). Business owners must obtain an EIN to complete the following company-related tasks:
- Hiring employees
- Opening a business bank account
- Applying for local licenses and permits
- Applying for credit in the name of the business
Do I Need a Federal Tax ID (EIN) Before Forming an LLC or Incorporating?
Typically, most business owners will incorporate or form their LLC at the state level before obtaining an EIN. This is due to the fact that applications at the federal level are often validated against state databases. Therefore, owners who apply for an EIN without properly completing their state filing will most likely get rejected.
How To Obtain an EIN for Your LLC?
An EIN for an LLC can be granted online fairly easily. Business owners should start by researching the terminology associated with an EIN to become more familiar with the process. There are a few steps to follow to obtain an EIN for your LLC.
- Prepare your information: Be prepared to answer complex questions regarding your company and its owners.
- Assign a responsible party: Remember that an LLC may have many members, but only one can be the responsible party for an EIN application. Owners should come together to designate one partner to hold the title as the responsible party. Personal information for this named individual will be required during the EIN application process.
- Apply online for an EIN: An EIN can be obtained via the IRS Online EIN Application. The processing time typically takes about 30 minutes. Normal business hours are from 7 a.m. to 10 p.m. PST. The IRS no longer provides telephone support for EIN applicants.
- Receive the EIN documents: If applying online, you‘ll receive an email letting you know that your application has been processed. The IRS will then send your official EIN documents through traditional mail delivery.
If you need help determining if you can get an EIN before LLC, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.