EIN Number For LLC: Everything You Need to Know
The EIN number for LLC is the unique employer identification number (EIN) used by the state and the Internal Revenue Service (IRS) to identify a Limited Liability Company (LLC).3 min read
2. What Is a Responsible Party?
3. Does an LLC Need an EIN?
Federal Tax ID Number (FTIN) is another title for an EIN, so federal employer identification numbers (FEINs), EINs, and FTINs are all the same.
LLCs use these nine-digits tax numbers for filing tax returns and other business transactions like banking and payroll processing.
EINs are obtained through the IRS and given to these four entity types:
- Sole proprietorships
- Corporations (C Corp and S Corp)
- Limited Liability Companies (LLCs)
Business owners will need an EIN before being able to open a business bank account or credit card or obtain any permits or licenses.
EINs will need to be provided by the company owner on any tax forms for registration or reporting and on all payroll documents.
These nine-digit ID numbers are also used when a business provides any service that exceeds $600 within the year and therefore need to submit a 1099 form.
Just like your personal SSN (Social Security number) the EIN is an important identifier for your business and should be well-protected.
What Is an LLC?
LLCs are known as pass-through business entities like partnerships and sole proprietorships, but they provide the same liability protection for their members that corporations do. This means that the company income "passes through" to the owners and therefore avoids double taxation, but those same owners (members) are not held responsible if the company goes under so their personal property will remain protected.
Company profits are claimed on the personal tax returns of the members that the income passed through to, but owners can also choose from a few different tax options when starting an LLC. They can request to be taxed as a Sole Proprietorship or an S Corp (S Corporation).
LLCs are currently more popular than any other business structure in the United States.
State rules and regulations for LLCs differ when it comes to startup costs, business name requirements, membership rules, and more. You'll want to be sure you're aware of the specific requirements within the state you wish to do business before getting started.
LLCs might also need to follow particular federal requirements depending on the type of business they do, but they technically are not federal entities.
The protection offered to members of an LLC is the biggest benefit of choosing this particular type of business structure. If an LLC has credit card debt, the credit company cannot come after the LLC's members to fulfill those debts.
What Is a Responsible Party?
Within any business entity, you'll have a “Responsible Party” which is an owner or member chosen to control the finances of the company. This person manages any funds or assets and therefore has the ability to choose particular directions for the business and its monies.
This "Responsible Party" is required to obtain the EIN for the LLC. Multi-member LLCs will need to elect this person, but in the case of a single-member LLC, the choice is obvious.
Does an LLC Need an EIN?
If the sole owner or member of a single-member LLC decides to be viewed as a sole proprietorship in the eyes of the IRS, then they will not need an EIN. This is likely when an LLC is based in a home and there are no employees, just one owner who acts as manager and all other business roles.
In the case that an LLC hires any employees, the business will then need to obtain an EIN. Up until 2009, LLC owners were permitted to use their personal SSNs for payroll taxes, but now those taxes must be processed with an EIN.
An LLC is not actually a recognized entity by the IRS, so they have the ability to decide their business structure for taxation. An LLC can be taxed as one of the following:
- Corporation (must have an EIN)
- Partnership (must have an EIN)
- Sole proprietorship (may need an EIN)
If you need help with an EIN number for 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.