LLC Tax ID Number: Everything You Need to Know
Your LLC tax ID number is a way for the IRS to identify your company to guarantee that you are correctly reporting your company's losses and profits. 3 min read updated on January 01, 2024
Your LLC tax ID number is a way for the IRS to identify your company to guarantee that you are correctly reporting your company's losses and profits.
Tax ID Introduction
All limited liability companies (LLC) with employees are required by law to obtain a tax identification number from the IRS. Multi-member LLCs are also required to have a tax number. Employer Identification Number (EIN) is another name for a tax ID number. Just as Social Security numbers are used to identify people, tax ID numbers are used to identify LLCs.
The IRS provides tax ID numbers to a wide range of business entities:
- Limited liability companies
- Sole proprietorships
Tax ID numbers are specific to the company to which they are issued, and every number will have nine digits. When an LLC hires its first employee, or when a sole proprietorship makes the transition to an LLC, a federal tax ID number required. The owner of an LLC sole proprietorship can use his Social Security Number for tax filings as long as his business has no employees. If you are worried that including your Social Security Number on client and vendor forms will expose you to identity theft, having a tax ID number can help protect you from this issue.
You can either authorize someone in your company to apply for a tax ID number or you can handle this task yourself. If you want the flexible structure and liability protections of an LLC, there are several important tasks that you need to complete, including obtaining a federal tax identification number. The best way to make sure you don't miss any steps necessary for forming your LLC is working with an experienced attorney.
Tax IDs and Banking
Your LLC will need a tax ID number to complete a variety of important banking tasks, such as:
- Obtaining a company credit card
- Acquiring state business permits
- Opening a bank account solely for your LLC's use
Without a tax ID number, banks would have no way to identify your company. Before working with your LLC, banks will need both your tax ID number and a copy of your business's Articles of Organization. Having these items will prove that LLC members and the LLC itself are legally separate. Without a tax ID number, you won't be able to hire employees or open a business bank account, both of which are an important part of successfully operating an LLC.
Vendors and Tax IDs
Many vendors will not work with limited liability companies that do not have a tax ID number. If your LLC has goods that it wishes you sell to the public, you will be required obtain a tax ID number. With a tax ID number, some vendors will allow you to purchase items wholesale. If you don't have a tax ID number, you probably won't be able to make wholesale purchases.
Getting a Tax ID Online
If you're ready to acquire your tax ID, you can do so by visiting the IRS website or by getting in touch with a representative by calling 1-800-829-4933. When applying online, you should be aware that the online application is only available during certain periods of the day. Applying online is the easiest and fastest solution for obtaining a tax ID.
Essentially, the online application is a digital version of Form SS-4. This is the same form that you would fill out when applying for your ID number. Make sure that you fully review the form before you start working on your application. Knowing what questions you will be asked ahead of time will considerably speed up the process.
You can only use the online application if your LLC will operate principally in the United States or United States Territories. You will need either a Social Security Number, ITIN, or EIN to apply for a new tax ID number. Only a single person in your LLC is allowed to apply for a tax ID daily. You must also complete your online application in a single session. Online applications that are left idle for fifteen minutes will expire. Once your session expires, you will have to start your application over from the beginning.
The benefit of applying online is that you should immediately receive your tax ID number after your application has been submitted.
If you need help with obtaining an LLC tax ID number, you can post your legal needs 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.