Tax ID Number for LLC: Everything You Need to Know
The IRS uses a tax ID number for LLC also known as LLC's employer identification number, for the determination of the LLC as a business entity for tax purposes.3 min read
2. Do All Limited Liability Companies Need to Have a Tax ID Number?
3. What Is the Significance of Having a Tax ID Number?
4. What Should an LLC Know About Obtaining a Tax ID Number?
5. How to File for Your Tax ID Number Online Using the IRS Website
Tax ID Number for LLC
The IRS uses a tax ID number for LLC (limited liability company), also known as the LLC's employer identification number (EIN), for the determination of the LLC as a business entity for tax purposes. The IRS classifies a limited liability company as a partnership, a corporation, or a taxable disregarded entity – meaning that for tax purposes there is no separation of the business from its owner. Using the employer identification number helps to make completing paperwork for the company go smoothly and fulfills the tax obligations for the LLC.
Do All Limited Liability Companies Need to Have a Tax ID Number?
An employer identification number is required if one of the following is true:
An LLC currently has workers employed
An LLC has more than one owner
A sole-proprietor LLC is on the verge of hiring its first employee
What Is the Significance of Having a Tax ID Number?
For an LLC to open a business banking account, the company must have an employer identification number. The tax ID number gets used on the company's business and tax documents. Banks require a tax ID number for an LLC, so the institution can quickly identify the company.
In addition to providing the EIN, banks will also need a copy of the LLC's articles of organization. The purpose of obtaining this from the company is so the bank can prove the LLC is a legally separate entity from its members.
Another important reason for an LLC to have a tax ID number is related to business relationships. Some vendors refuse to conduct business with an LLC that does not have an employer identification number. It's beneficial for a company to have its tax ID number so the company can purchase products at wholesale price from particular sellers.
What Should an LLC Know About Obtaining a Tax ID Number?
An LLC can get a tax ID number from the IRS with a choice of four methods:
By phone and speaking with an IRS representative
By visiting the IRS website
When choosing to file by fax or mail, you must submit to the IRS a Form SS-4. Be sure to provide accurate information when completing Form SS-4, such as:
Nature of business activities
Number of employees
LLC business name and address
Address and Social Security number of an authorized representative of the LLC
When filing over the phone or via website, a tax ID number is issued immediately once you provide all the necessary information to the IRS. After faxing Form SS-4, the IRS will issue the federal tax identification number in four business days. The process takes longer when choosing to apply by mail. Once the IRS receives your Form SS-4, it sends the tax ID number for the LLC within four weeks.
You have the option to choose that a third-party service process your EIN application. However, using a service will come with service fees, while it's completely free to apply directly to the IRS.
How to File for Your Tax ID Number Online Using the IRS Website
The quickest and simplest way to get an employer identification number is by using the online application. If you are going to apply using this method, know that the system is available only at specific times Monday through Friday during the day and evening. You will be providing the same information you would if applying by using the other methods. Online submission is just an electronic version of Form SS-4.
If the LLC does not have a U.S. office, you will not be allowed to use the IRS website to apply for the federal tax ID number.
To apply, do the following easy steps:
1. Go to IRS.gov and type "EIN" in the search box on the site
2. Look for a link that reads "apply online now." Read all the instructions given for obtaining an EIN.
3. Click on the "begin application" button. You will be asked to identify the structure of the company; click on the "limited liability company" button. Be sure to enter all the necessary information once prompted by the system.
If you need help with a tax ID number for 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.