Do I Need A Federal Tax Id for LLC: Everything You Need to Know
If you've recently established a limited liability company (LLC), you're likely wondering whether you need a federal tax ID for an LLC. 3 min read
2. LLC Taxation Election
4. Getting an EIN
5. Taxation for Foreign Nationals
Does an LLC Need an EIN?
If you've recently established a limited liability company (LLC), you're likely wondering whether you need a federal tax ID for an LLC. The rules for LLCs vary from state to state, but all business structures of this kind are subject to federal taxation. In some cases, LLCs may need to register with the IRS to receive employer identification numbers, commonly called EINs. The EIN identifies the business to the IRS for tax purposes in the same way that a Social Security number does for an individual.
Whether your LLC needs an EIN depends on the type of business you own and whether you employ others. An LLC can be set up as a partnership, corporation, or sole proprietorship. The owners of an LLC are also called members. An LLC with only one member does not typically need an EIN, as long as the LLC has no employees. The exception is a sole proprietor that must file excise or pension tax returns. Before 2009, a single-member EIN could also use his or her Social Security number to file payroll taxes. Today, however, single-member LLCs with employees must have EINs for payroll taxation.
If your LLC moves to a new location or changes its name, you can keep using the same EIN. A partnership that converts to an LLC can also keep using the same EIN if it is still structured as a partnership for tax purposes. An LLC that needs an EIN can request one from the IRS at no charge.
LLC Taxation Election
LLCs are created by state statute but are not recognized as separate business entities by the IRS. For tax purposes, an LLC can have the following classifications:
- Disregarded entity/sole proprietorship (single-member LLC only)
- Partnership (multiple-member LLC only)
LLCs that opt for corporation or partnership taxation must establish EINs. You may also need to receive an EIN if you want to change your LLC's ownership structure. In addition, in the following situations the LLC must receive a new EIN:
- The business is sold.
- The business is inherited and will be run as a sole proprietorship.
- The business is inherited and will be managed by the owner's estate.
If you want to establish a bank account for your LLC, you'll need to provide a tax ID number. This can either be an EIN or Social Security number. You'll also need to provide a copy of the articles of organization for your LLC. Vendors often require your tax ID number as well, especially for wholesale orders. Public sales mandate the use of a tax ID number.
Getting an EIN
Having an attorney help you with the federal tax ID process can ensure you receive the protected status and benefits of an LLC business structure. You can use one of four methods to request an EIN:
- Apply online and receive your EIN immediately once your information is validated. This option is available for businesses located within the United States or its territories. The online application is available Monday through Friday.
- File by phone between 7 a.m. and 7 p.m. local time, Monday through Friday. U.S. applicants can call 800-829-4933, while foreign applicants should call 267-941-1099. This method also provides an immediate EIN to qualified applicants.
- Download Form SS-4 from the IRS website and fax it to the IRS. This service is available 24 hours a day, seven days a week. Include your fax number and receive your EIN by return fax in approximately four business days.
- Mail Form SS-4 to the IRS and receive your EIN in the mail in about four to six weeks. Make sure to include the name and address of your LLC as well as the name, address, and Social Security number of an authorized representative.
Taxation for Foreign Nationals
If you are a resident alien or non-resident and have not been issued a Social Security number, you can request an individual taxpayer identification number (ITIN) by filing Form W-7. This form requires proof of your legal status in the United States filed through an IRS-authorized acceptance agent and is required to do business in the U.S.
If you need help with getting a federal tax ID for your 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.