Federal Tax ID Number for LLC: Everything You Need to Know
You need a federal tax ID number for LLC, also known as an employer identification number (EIN), when dealing with taxes once you form a limited liability company (LLC). 3 min read
2. What Is an EIN?
3. How Do I Apply for an EIN?
4. Do Single-Member LLCs Need a Federal Tax ID?
What Is a Limited Liability Company?
Unique to the United States, a limited liability company (LLC) is a business where the individual is responsible for taxes. An LLC is a partnership, business corporation, or other taxable entity. There are single-member, member-managed, or multi-member LLCs.
All LLCs enjoy the limited liability, or protections, of a corporation. That means that they are not liable for business debts and other responsibilities. For instance, creditors cannot go after members or owners of an LLC in regards to their personal assets.
What Is an EIN?
The employer identification number (EIN) is a nine-digit number that is similar to a Social Security number. The federal tax ID number and EIN are the same thing. The IRS issues the EIN into the following business entities:
- Sole proprietors.
You need an EIN when forming your LLC in order to file taxes, open a bank account in the business' name, and apply for business permits and credit cards. You use the EIN for payroll processing, excise tax reporting, and state tax registration. You also need a tax ID number if your LLC sells items to the public.
If you convert your business to an LLC, you need to get a new tax ID. Same thing if your LLC goes from a single-member to multi-member LLC. However, partnerships that convert to an LLC can use the same tax ID number as long as the LLC states it's a partnership for taxation purposes.
How Do I Apply for an EIN?
Securing a federal tax ID is vital to protect your personal assets. Prior to applying for an EIN, you must make sure you have all of your LLC paperwork completed, which you can do online. However, it must be done in the state you live in, and often you need to register the LLC with the secretary of state's office. You need to provide the exact title of the LLC, your business address, and all the names of the owners.
After you finish registering your LLC, you must also make sure that all registration fees are paid, and articles or certificates from the organization are in hand.
There are several ways you can apply for an EIN.
- Online: If your business is situated in the United States or its territories, you can apply online from 7:00 a.m. until 10:00 p.m. PST during the week. As the fastest option, the online application allows you to receive your EIN immediately after completion. You need to enter all your information on the IRS site.
- Fax: Complete the paper form and fax it to the IRS. Remember to write the correct Fax-TIN number on the paperwork. Often, this number can change, so make sure you have the most current one. Include your own fax number so you can receive your EIN from the IRS. Expect this process to take about four business days.
- Mail: Send the finished application to your state's service center. You should receive your EIN in about four to six weeks.
- Phone: Call the IRS during the week from 6:00 a.m. until 11:00 p.m. PST and request an EIN over the phone.
If you ever misplace your EIN, contact the IRS' telephone assistance center during the weekday. After the IRS verifies that you're the responsible party, it will give you the EIN. A responsible party is the person who controls, manages, and directs the funds or assets of the LLC. If the LLC has multiple members, a single representative of the LLC must be allocated. This single responsibility party obtains the federal tax ID number for the LLC.
Do Single-Member LLCs Need a Federal Tax ID?
In most instances, single-member LLCs do not need a federal tax ID. That's because the individual's Social Security number can be used for federal income tax purposes. However, if the single-member LLC has employees and pays federal employment or excise taxes, it needs a tax ID number for LLC. Often, single-member LLCs obtain federal tax ID for LLC because they need one to open a business bank account.
If you need help with obtaining a federal tax ID number for an 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.