1. EIN for LLC: Overview
2. Does an LLC Need an EIN?
3. Considerations
4. How Do I Apply for an EIN?

To get an EIN for an LLC, you must contact the IRS. This nine-digit number will help identify your business for tax purposes. Once you have taken the steps to form an LLC, you can obtain your employer identification number (EIN) online. The electronic application is fairly straightforward. However, this process can also be done by mail or by phone.

EIN for LLC: Overview

When you first form an LLC, you must adhere to your state's specific guidelines. This will also require compliance in regards to state and federal tax laws. By understanding these regulations, you will be able to confidently meet all of your tax requirements as you begin your new venture as an LLC.

Just as individuals have a Social Security number (SSN), businesses have an employer identification number. Although they both have nine digits, they are written differently. For example, an SSN would look like "122-33-4567," whereas an EIN would look like "12-2334567." This helps distinguish individual taxpayers from LLCs, corporations, and partnerships.

You can obtain this number through the IRS website, by mail, or by calling the IRS directly.

Does an LLC Need an EIN?

When forming an LLC, owners are referred to as "members." In some cases, such as a single-member LLC, you may not need an EIN. For example, if you are a home-based business and act as the sole owner/manager, you do not need an employer identification number to do business. However, you would elect to be treated as a sole proprietorship for tax purposes.

Once you grow and hire employees, you will need to obtain an EIN. This is beneficial, as it helps protect you from identity theft. Banks will also typically ask for this number when you open a business bank account.

Considerations

One of the perks of being an LLC is that the IRS does not recognize this entity. This means you can choose to be taxed as you please. If there is only one member, you can choose to be taxed as a corporation or as a sole proprietorship. If there are two or more members, you can be taxed as a partnership or a corporation.

If there is ever a change in ownership, you may need to obtain a new EIN. The same is true when you sell your LLC, as the new owners may opt for a new number.

In terms of when you should apply, it is recommended that you wait until your business is a legal entity. This is because your legal business name must match the name listed on your EIN application. To begin this process, complete the following steps:

  1. Go the IRS website.
  2. If you would like to apply online, you will need your Social Security number. Have this information ready for your application.
  3. Fill out Form SS-4 if you would like to apply by mail.

It is important to note that this process is free (unless you authorize a company to do this on your behalf). When applying online, the process is quick. You can have your new number in as little as five minutes. If you opt for the mailing service, receiving a new number will take between four and five weeks.

How Do I Apply for an EIN?

You can apply online, by mail, over the phone, or by fax.

The most efficient and straightforward way to apply is through the IRS website. Before you begin this process, make sure you know what it entails. For example, you will need to name a responsible party. Regardless of whether your LLC has one member or ten, in the eyes of the IRS, there is just one responsible party for each application.

Also, prepare information such as your projected wages and the SSNs for all members ahead of time. Doing so will just ensure that the process is quick and goes smoothly.

Before you form any business, it is imperative that you understand your obligations regarding taxation. This will help you succeed in the long-term and, more importantly, remain in good standing. If you have any questions about this process, it is recommended that you seek a professional opinion.

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