Can I Get an EIN Without an LLC? Requirements & Benefits

Key Takeaways

• You Can Get an EIN Without an LLC: An EIN (Employer Identification Number) is not exclusively for LLCs. Sole proprietors, trusts, estates, and other entities can also apply.
• When an EIN is Required: Businesses need an EIN if they hire employees, open business bank accounts, or file specific types of taxes.
• Benefits of Having an EIN: Protects personal identity, facilitates business banking, builds credibility, and is often required for contracts.
• Applying for an EIN: The IRS offers a free application process online, by mail, fax, or phone.
• EIN and Business Structure: Different business structures have different EIN requirements—multi-member LLCs, corporations, and partnerships require one, while sole proprietors may not.
• Changing Business Entity: Transitioning from a sole proprietorship to an LLC or corporation requires a new EIN.
• Using an EIN for Banking and Credit: Many banks require an EIN to open a business bank account, get a business credit card, or apply for loans.

Can I get an EIN without a business? An EIN, or Employer Identification Number, is a type of Tax ID number used by the IRS. It identifies your business for tax purposes. You do not need an EIN if you don't have a business, because your social security number will be your Tax ID number.

What's an LLC?

LLC means "limited liability company." LLCs are state entities, and rules regarding them can be different in each state. However, LLC owners must still pay federal taxes. LLC owners may need an EIN, or Employer Identification Number — sometimes referred to as a Tax ID (TIN).

When Do You Need an EIN?

Single-member LLCs (or sole proprietorships) may not need an EIN. If you are the owner, manager, and director of your home-based business, you do not need an EIN. Instead, you can use your social security number (SSN). However, once you decide to hire employees, you must have an EIN.

LLCs can choose how they want to be taxed from these options:

• As a corporation
• As a partnership
• As a sole proprietorship (if there is only one member)

LLCs choosing to be taxed as a corporation or partnership need an EIN.

Who Can Apply for an EIN Without an LLC?

An EIN is not just for LLCs. Many other entities and individuals can apply for one, including:

• Sole Proprietors: Individuals running a business without an LLC can use an EIN instead of their Social Security Number (SSN) for tax purposes.
• Non-Profits and Trusts: Charitable organizations and estates often require an EIN.
• Corporations and Partnerships: These business structures are required to obtain an EIN.
• Real Estate Investors: If you operate rental properties under a separate business entity, an EIN may be necessary.
• Freelancers and Independent Contractors: While not required, some professionals prefer using an EIN to keep business income separate from personal income.

Even if you operate without an LLC, having an EIN can provide tax and privacy advantages.

Choosing How to Register

Registering as a sole proprietor is good if you are a single owner who operates the business alone. There are no employees, and the owner is responsible for all payment, debts, and receives all business profits.

If you are a single owner or a group who wants the protections of a larger company, an LLC is for you. An LLC is technically a business, but it is considered incorporated and has more flexibility.

It's important to talk to your accountant when deciding how to register.

Pros and Cons of Using an EIN Without an LLC

Before deciding whether to apply for an EIN without an LLC, consider these pros and cons:

Pros:

• Protects Your SSN: Using an EIN instead of your SSN can reduce the risk of identity theft.
• Easier Tax Reporting: If you run a business, an EIN can simplify tax filings, particularly for independent contractors.
• Required for Business Banking: Most banks require an EIN to open a business bank account.
• Establishes Business Credibility: An EIN can make your business appear more professional and legitimate to clients, vendors, and lenders.

Cons:

• Not Always Necessary: If you’re a sole proprietor without employees, you may not need an EIN.
• Separate Tax Filings May Be Required: If you transition to a different business structure, you may need to file additional tax forms.

If you’re unsure whether an EIN is beneficial for your situation, consult a business attorney or tax advisor.

Changing a Sole Proprietorship

A sole proprietor may register for an EIN or simply use their SSN. However, if the following changes occur, a sole proprietorship will need an EIN:

• You hire employees.
• You set up a Keogh or Solo 401(k) retirement plan.
• You buy or inherit an existing business
• You incorporate or form an LLC.
• You file for bankruptcy.

How to Get an EIN Without an LLC

You can apply for an EIN through the IRS using one of the following methods:

1. Online – The fastest method; you’ll receive your EIN immediately after submitting the application on the IRS website.
2. Fax – Complete Form SS-4 and fax it to the IRS. You’ll typically receive your EIN within four business days.
3. Mail – Mail a completed Form SS-4 to the IRS. Processing can take up to four weeks.
4. Phone – International applicants can apply by phone, but U.S. residents must use other methods.

Applying for an EIN is free, so be cautious of third-party services that charge unnecessary fees.

Changing an LLC

You may also need a new EIN if any changes to ownership occur:

• Your business is bought.
• Your business changes from a sole proprietorship to a corporation or partnership.
• The owner of a business dies.

There are four ways to get an EIN for your LLC:

• Apply online — the most efficient way, will enable you to receive your EIN immediately.
• Telephone — will also enable you to receive your EIN immediately.
• Fax — requires you to complete form SS-4, from the IRS website.
• Mail — requires you to complete form SS-4, from the IRS website.

If you do not have an SSN, you need to apply for an individual taxpayer identification number (ITIN). To receive this, you must file Form W-7: IRS Application for Individual Taxpayer Identification Number.

Applying for a Business License

A business license and an EIN are both important when starting a new company. In many states, you can get either one first — or both at the same time. Some states require a Tax ID or EIN before getting a license.

Business licenses come from cities and counties, and each can establish its own requirements. Some municipalities don't even ask for an EIN in their license application.

States that don't require a TIN in their license application do require a Social Security Number. Some states, like Washington, prefer to track the individuals, not businesses, to ensure responsibility. Some places require the TIN or EIN as part of the application process. They keep license information on the websites of their finance departments.

Changing Your Business

If you apply for a business license with your SSN and decided to change your business to an LLC with an EIN, you need to let your state tax authority and local licensing body know. State and federal governments require payroll deductions and need the EIN for labor and wage compliance procedures.

EIN Benefits

Even if you don't need an EIN, there are some benefits to having one:

• It identifies your business within the IRS.
• An EIN is obligatory if you want to open a business bank account.
• An EIN can help you avoid identity theft.
• An EIN can establish independent contractor status.

Unless you are a sole proprietorship or an LLC with no employees, you will probably need an EIN for your small business. The best way to learn about EINs and other aspects of business tax law is to speak with a skilled tax attorney near you.

EIN vs. SSN: Which One Should You Use?

If you operate a business without an LLC, you might wonder whether you should use your SSN or apply for an EIN. Here’s a comparison:

While an SSN may be sufficient for some sole proprietors, an EIN can provide added security and flexibility.

Frequently Asked Questions

1. Do I need an EIN if I’m self-employed?
   No, if you’re a sole proprietor without employees, you can use your SSN. However, an EIN can help with tax reporting and business banking.
2. Can I use an EIN instead of an SSN for tax purposes?
   Yes, an EIN can replace your SSN on business tax filings, reducing the risk of identity theft.
3. How long does it take to get an EIN?
   Online applications receive an EIN immediately. Fax applications take about four days, while mail applications can take up to four weeks.
4. Do I need a new EIN if I form an LLC later?
   Yes, if you transition from a sole proprietorship to an LLC, you’ll need a new EIN.
5. Can I apply for an EIN if I don’t have a Social Security Number?
   Yes, foreign individuals can apply for an EIN without an SSN by using an Individual Taxpayer Identification Number (ITIN) instead.

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