LLC Tax Identification Number: Everything You Need to Know
An LLC tax identification number is a nine-digit number the IRS uses to distinguish your company from other business entities. 3 min read
An LLC tax identification number is a nine-digit number the IRS uses to distinguish your company from other business entities.
Basics of LLC Tax IDs
If a limited liability company has even one employee, the IRS requires the company to have a tax ID number. Similarly, LLCs that have multiple members must have a tax ID.
Tax ID numbers are also commonly known as Employer Identification Numbers (EIN). Once you've been issued a tax ID number, the IRS will use the number to identify your company, much as the government uses Social Security Numbers to identify individual people.
Entities that are required to obtain tax ID numbers include:
- Sole proprietorships
A sole proprietor of an LLC that is interested in hiring an employee for the first time will need a tax ID number before they can make their hire. However, if an LLC has a sole proprietor and no employees, then the company owner can use his Social Security Number for tax filings instead of getting a tax ID number.
If you choose to use your Social Security Number instead of a tax ID when filling out forms for vendors and clients, you should be aware that you may be at risk for identity theft. Many people choose to acquire their tax ID themselves, although it's also possible to appoint someone to apply for the number on your behalf.
Acquiring a tax ID number is one of the many important steps to forming your LLC. If you complete these steps successfully, you will be able to enjoy the limited liability protections and versatile structure of this business entity. Hiring an attorney that understands the ins and outs of LLCs is a good decision if you want to successfully form your company.
LLC Tax IDs for Banking
You will need your tax ID number to complete some of your LLC's most important banking tasks, including securing a line of credit, obtaining permits for your business, and establishing an LLC bank account. All of your LLC's banking and tax documents will need to include your tax identification number. Your bank can quickly identify your LLC by using your ID number.
Banks also want proof that your LLC and its members are legally separate, which is why they will request that you provide a copy of your Articles of Organization along with your EIN. A tax ID is required to open bank accounts for your business and to hire company employees.
EINs and Vendors
If you want to work with vendors, your LLC will need a tax ID, as many vendors avoid working with businesses that don't have these numbers. In addition, if you have plans to sell goods to them, you will need an ID number before you will be allowed to offer your items. Some vendors will allow you to make wholesale purchases if you have a tax ID number.
How to Get a Tax ID
Visiting the IRS website is one of the ways to acquire a tax ID number. You can also obtain an EIN by phone at 800-829-4933. Depending on the time of day you visit the website, you may not be able to file an application, as it is only available during certain periods. Applying online is a quick and easy solution for obtaining a tax ID.
The online application that you will fill out is identical to IRS Form SS-4. You can review a copy of Form SS-4 before beginning your application so that you'll know what questions you'll need to answer and what information you should provide. LLCs that are located in the U.S. or its territories can apply for a tax ID online.
If you want a new tax ID, you should possess either a:
- Social Security Number
You can only apply for one EIN a day, and only one person from your LLC can fill out the application. You must complete the application in one session. The application will expire after being idle for fifteen minutes, after which you will need to start over. You should instantly receive your ID number after you have completed your online application. When filling out your application, you should indicate the structure of your business by checking the option for an LLC.
If you need help applying for an LLC tax identification 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.