EIN for LLC

An EIN for LLC is a nine-digit Employee Identification Number (EIN), also known as a federal tax ID number. This is what the IRS issues to a business for tax filing purposes. Because it's nine digits long, think of it like a social security number for your business.

Does Every Business Need an EIN?

Limited liability companies, or LLCs, are considered relatively new business structures. LLCs are state entities, not federal entities, so rules governing their formation and maintenance may be different from state to state. LLC owners are still responsible for paying federal taxes. LLCs are not recognized as separate taxable structures by the IRS. In some instances, LLC owners may have to get an EIN from the IRS. According to the IRS, the number of owners a business has as well as the characteristics of the company determine what you should use for tax identification.

What's an LLC?

An LLC is a business that enjoys the benefits of limited liability protection, like a corporation enjoys, while also having pass-through taxation such as a sole proprietorship or partnership. LLCs can choose from several taxation options; they may be taxed like an S-corp or a sole proprietorship. Due to these benefits, most business owners in America operate LLCs.

Single-Member Companies

The owners of an LLC are "members." Single-owner LLCs may not require an EIN. You're not required to have an EIN in the event your business is based in your home and you act as the:

  • Business owner

  • Director

  • Manager

  • Maintenance department

In this case, you may choose to be classified as a sole proprietorship, and use your personal social security number for tax purposes.

Single-Member LLCs That Have Employees

If your single-member LLC expands and hires employees, you'll need an EIN. Until 2009, single-owner companies were able to pay payroll taxes only using the owners' personal social security numbers as EINs. Since January 2009, all single-member businesses are required to have an EIN for payroll tax purposes, like most other companies. Businesses can use the EIN in much the same way that individuals use a social security number when those companies file taxes.

How to Get an EIN

There are various ways to apply for an EIN for your business. You can apply:

  • Online

  • Over the phone

  • By fax

  • Via mail

Applying online or over the phone are the quickest ways to get your EIN; once your information is validated, you'll receive your EIN immediately. If you apply by fax, expect to receive your EIN in about four days via a fax from the IRS.

For each application, you'll have to name a responsible party. There can only be one responsible party for any tax ID application. If you have partners, you will decide among the partners who the responsible party will be.

Entity Classification by the IRS

The IRS allows the LLC to choose how it is classified for tax purposes. A single-owner company may choose to be classified as a corporation or as a "disregarded" entity. The IRS treats disregarded entities like sole proprietorships. Single-member LLCs that want to be treated as corporations are required to file one of the following:

  • IRS Form 8832, allowing you to be treated as a C-corp

  • IRS Form 2553, electing classification as an S-corp

If you fail to file either of these forms for tax purposes, your LLC will be classified as a disregarded entity by the IRS, and you'll be taxed the same as a sole proprietorship.

Considerations

If your company's ownership structure changes, you may need a new EIN. For example: A single-member LLC that's been taxed as a sole proprietorship then chooses to be taxed as a corporation. This can be due to financial or operating reasons, but because the tax structure has changed, a new EIN is needed. If you sell your company, the incoming owners will have to request a new EIN. Besides tax considerations, you might want a new EIN for other reasons. In some states, your LLC has to report income on state tax returns, and an EIN is required for that. Also, many companies that you do business with may require an EIN to process payments.

If you need help with an EIN for your business, 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, Stripe, and Twilio.