Key Takeaways

  • Most LLCs need an Employer Identification Number (EIN) if they hire employees, have multiple members, or elect to be taxed as a corporation.
  • A single-member LLC without employees can often use the owner’s Social Security number for taxes, but obtaining an EIN is still recommended for banking and vendor purposes.
  • An EIN helps separate business and personal finances, simplifies tax filing, and builds business credibility.
  • Foreign-owned LLCs and LLCs involved in excise or pension plans must obtain an EIN.
  • You can apply for an EIN online, by fax, mail, or phone through the IRS.

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. 

Why an EIN Matters for LLCs

Even if your LLC isn’t legally required to have one, obtaining an Employer Identification Number (EIN) offers significant advantages. An EIN serves as the business’s federal tax identification number and allows your LLC to:

  • Open business bank accounts: Financial institutions typically require an EIN to verify your company’s identity.
  • Build business credit: Establishing a credit profile under your EIN helps separate your personal and business credit.
  • Hire employees: The IRS mandates that any LLC with employees must have an EIN to report payroll taxes.
  • File certain federal taxes: If your LLC owes excise taxes, pension plan taxes, or is subject to federal withholding, an EIN is required.
  • Increase privacy: Using an EIN instead of your Social Security number reduces the risk of identity theft.

Obtaining an EIN demonstrates that your LLC operates as a separate legal entity — a key element of maintaining limited liability protection. Even single-member LLCs benefit from this added legitimacy.

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)
  • Corporation
  • 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.

When an LLC Is Required to Get an EIN

Certain business activities automatically trigger the requirement for an EIN, regardless of LLC structure. You’ll need an EIN if your LLC:

  1. Has more than one member (multi-member LLCs are taxed as partnerships by default).
  2. Hires employees or plans to hire in the future.
  3. Elects corporate taxation by filing Form 8832 or Form 2553.
  4. Files excise, employment, or alcohol/tobacco/firearms taxes.
  5. Owns a Keogh or retirement plan.
  6. Includes foreign members or is owned by a foreign entity.
  7. Changes structure — for instance, converting from a single-member to multi-member LLC or from a partnership to a corporation.

Even if your LLC doesn’t meet these criteria, having an EIN can streamline dealings with the IRS and prevent issues when expanding operations or bringing in investors.

Banking/Vendors

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.

Benefits of Having an EIN Even If Not Required

Many single-member LLC owners initially skip applying for an EIN because they use their Social Security number for tax filings. However, doing so can create long-term complications. Benefits of having an EIN include:

  • Simplified financial separation: Maintaining distinct accounts helps protect your liability shield.
  • Professional credibility: Clients and vendors often prefer working with entities that have an EIN.
  • Easier tax reporting: It simplifies 1099 filings and other IRS paperwork for contractors and suppliers.
  • Business loan eligibility: Lenders usually require an EIN to approve financing.

In short, while a single-member LLC might technically operate without an EIN, obtaining one establishes a clearer distinction between the owner and the business, making administration and growth much easier.

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.

How Long It Takes and Common Mistakes

The IRS typically issues EINs instantly when applied for online, though mail and fax methods can take several days or weeks. Common errors to avoid include:

  • Using incorrect entity classification: Ensure your LLC’s tax classification matches your IRS form (Form SS-4).
  • Applying multiple times: Submitting duplicate applications can cause delays.
  • Using the wrong responsible party: The responsible party must be an owner or managing member with a valid Social Security Number or ITIN.
  • Not updating after changes: If your LLC changes ownership, adds members, or alters tax status, you may need a new EIN.

To stay compliant, always use the EIN for all tax filings, payroll reports, and financial correspondence related to your LLC.

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.

EIN Requirements for Foreign-Owned LLCs

Foreign individuals or entities forming an LLC in the U.S. must obtain an EIN to comply with federal tax laws. Even if no U.S. employees exist, the IRS requires an EIN for reporting income sourced from the United States. Key points include:

  • Non-U.S. residents can apply by filing Form SS-4 and writing “Foreign” on the line requesting a Social Security Number.
  • Applications can be submitted by mail or phone to the IRS’s International Office.
  • Foreign-owned single-member LLCs must file Form 5472 annually, reporting certain transactions between the U.S. LLC and its foreign owner.

Failing to obtain an EIN or submit required forms can lead to significant penalties. Seeking professional legal assistance through platforms like UpCounsel can ensure compliance with U.S. tax obligations.

Frequently Asked Questions

  1. Does an LLC need an EIN if it has no employees?
    Not always. A single-member LLC without employees can use the owner’s Social Security number, but an EIN is recommended for banking and liability protection.
  2. Can I use my personal Social Security number for my LLC?
    Yes, but doing so may blur the line between personal and business finances. An EIN helps maintain clear separation and protect liability.
  3. How much does it cost to get an EIN for an LLC?
    It’s free to apply directly through the IRS website or by submitting Form SS-4.
  4. Do I need a new EIN if my LLC changes names or states?
    No, a name or address change doesn’t require a new EIN, but changing your tax structure or ownership might.
  5. How do foreign LLC owners get an EIN?
    They can apply by mail, fax, or phone with the IRS International Office using Form SS-4 and providing proper identification or ITIN documentation.

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.