1. Does an LLC Need an EIN?
2. What Is an EIN?
3. Single-Member LLCs
4. Single-Member LLCs with Employees
5. Taxation Election for LLCs
6. Getting an EIN

Does an LLC Need an EIN?

An LLC EIN, or employer identification number, is used to identify the limited liability company in question with the IRS. An LLC is a state entity, so laws for forming and maintaining this type of company vary based on state laws. LLCs are also subject to federal taxation but only need to apply for an EIN in specific situations. Whether your LLC needs an EIN depends on some factors including how many owners it has. In addition, all LLCs that are treated as S or C corps for tax purposes must receive an EIN from the IRS. 

What Is an EIN?

An EIN is a set of digits that is similar to a Social Security number and is used by the IRS to identify businesses for tax purposes. This number is used to account for your payroll and other employee-related business taxes. The IRS will also use it to track your corporate activities.

Single-Member LLCs

Each LLC owner is called a member. Only some LLCs with only one owner need an EIN. Home-based one-member LLCs do not need an EIN; they simply use their social security number and are considered a sole proprietorship for the purposes of taxation. Unless you receive a regular salary from the LLC, you are not considered an employee. Those who receive a 1099 for work performed are also not considered employees of the LLC. 

You need an EIN if your LLC has a retirement plan, even if you're the only member. You also need an EIN if your LLC is required to file taxes separately. As a single-member LLC, you can choose to be considered either a disregarded entity or a corporation by the IRS. A disregarded entity is an LLC that is taxed like a sole proprietorship. If you want your LLC to be treated as a corporation by the IRS, you must file Form 8832 to be designated as a C corporation or Form 2553 to be designated as an S corporation.

Single-Member LLCs with Employees

If you hire employees to work for your LLC, you will need an EIN number to file taxes. This is a new rule for payroll taxes that took effect in 2009; previously, single-member LLCs could use their Social Security number for these taxes. These new laws also require some single-member LLCs to get a new EIN because the LLC rather than the single-member owner is now responsible for payroll taxes. If you were already using the legal name of the LLC for payroll tax purposes, you will not need to file for a new EIN.

Taxation Election for LLCs

An LLC that has opted to be treated like a corporation or partnership for tax purposes must have an EIN. If you change the ownership structure of your LLC, you'll need to apply with the IRS for a new EIN. If you sell your business, the new owners will need to get a new EIN, even if they plan to run the business as a sole proprietorship.

Getting an EIN

LLC owners can choose between four methods of obtaining an EIN.

  • Online: Applying online, the most efficient method, allows you to get an EIN immediately. The process takes about 30 minutes and is available between 7 a.m. and 10 p.m. Pacific
  • Phone: Applying over the phone also provides you with an instant EIN.
  • Fax: Download and print Form SS-4 from the IRS website and fax it. Faxed applications will receive an EIN via return fax in about four business days.
  • Mail: Download and print Form SS-4 from the IRS website and mail it. Mailed applications generally take longer to receive a response, typically about four to five weeks.

Gather pertinent information before beginning your application, so you have the answers to questions about your business handy. As part of the application process, you'll need to name a party who is responsible for taxation. This is a decision that should be made in conjunction with any other LLC owners. After applying, you'll receive an email with your official tax ID number and other pertinent documents. If your application is rejected, the rejection letter will not necessarily include more information about the reason why.

If you need help with an EIN for your LLC, you can post your job 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.