Your company will be given a nine-digit number called an Employer Identification Number (EIN), which is also known as a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number.
The IRS uses an EIN, which must be included in your business tax filings, to identify a company, just like a Social Security Number does.
What is an LLC?
Pass-through taxation and limited liability protection are two benefits of the business structure known as a limited liability company (LLC). The LLC, like corporations, is a separate legal entity from its owners. As a result, owners typically cannot be held personally liable for the obligations and debts of the business.
Several factors, including the number of owners and whether you have employees, determine whether your LLC is required to have an EIN.
Let's take a look at some of the reasons why your LLC needs an EIN.
What are the requirements for an EIN for a LLC with one member?
Unless you have employees or file excise tax returns, you are not required to have an EIN if you run a single-member LLC (where you are the sole owner with no partners or co-owners).
What requirements must an LLC with multiple members meet?
No matter how the LLC is taxed—as a partnership or a corporation—it must have an EIN if it has more than one owner or member.
What advantages does having an EIN bring?
There are good reasons to get an EIN for your business, even if it is not required. Your LLC may gain the following advantages by obtaining an EIN:
Separating your personal and business finances LLCs are required to separate their personal and business assets in order to protect themselves from personal liability. When it comes to business filings and documents, using an EIN rather than a Social Security Number helps show that your personal and business dealings are separate from one another.
Opening a business bank account: To open a business bank account, most banks require an EIN from your company.
discourages identity theft: You can assist in preventing identity theft by providing your EIN rather than your Social Security Number to customers and vendors.
aides in the establishment of business credit: Using an EIN, you can create a business credit history independent of your personal credit score. This may support an application for credit or a business loan.
Credibility – Using an EIN instead of your Social Security number signifies your business's legitimacy and aids in building vendor trust.
What is required to obtain an EIN?
You are required to provide certain information when applying for an EIN, such as:
The legal name, address, and trade name (your "doing business as" DBA name, if you have one) of the individual or entity for whom the EIN is being requested. The name of the responsible party and their tax ID (generally a person with authority to control, direct, or manage your business and the disposition of its assets and funds). The type of entity (e.g., corporation, LLC, sole proprietor) and the date your business was started or acquired. The highest number of employees you expect to
Retail Real estate Rental and leasing Transportation and warehousing Wholesale-agent/broker or Wholesale-other Other How do you obtain an EIN for an LLC? Construction Manufacturing Finance and Insurance Healthcare and social assistance
When you set up your LLC, you won't get an EIN out of the blue. The state will issue a certificate or other confirmation document once your LLC has been approved and filed. This certificate can be used to get an EIN from the Internal Revenue Service (IRS) and serves as legal proof of your LLC's status. EIN applications can be submitted via fax, mail, or online.
You can apply by phone, fax, or mail if your company is a foreign LLC, which means it operates in a state other than the state where it was established.
The IRS will only issue one EIN per responsible party per day, regardless of the method used.
Can my sole proprietorship's Federal Tax ID (EIN) be used again?
Your Social Security number is typically used as your business's Federal Tax ID number if you run it as a sole proprietorship or general partnership. A new EIN for your company must be obtained when you incorporate or form an LLC.
When do I require multiple EINs?
The majority of small businesses only need one EIN to operate. If, on the other hand, you intend to establish subsidiaries of your LLC or open another business, you may require additional EINs for your company.
If you conduct business outside of your state of formation, this is another scenario. "Doing business" means doing your normal business in another state on a regular basis or with a lot of people you know, not just sending a few packages around. Find out more about the definition of "doing business in a state" here. You must apply for a sales tax identification number from the state's department of revenue and register with the state's labor department for each state where your LLC will operate.