Every running business with employees is legally required to have its employer identification number (EIN), but sometimes, a company might also need an EIN even if it doesn’t have employees. EIN can be effectively described as your business’s social security number. You might want to consider getting an EIN for your business to be on the safe side, as it will always be there if you ever need it. On top of that, it doesn’t cost a lot, making it just an investment of your time.
Why Do I Need An EIN For An LLC?
If you own a limited liability company, it is vital that you understand the rules about EIN to determine if you need to obtain an EIN for your LLC. As discussed earlier, an employer identification number (EIN), also sometimes known as a federal tax ID number, is issued by the IRS to an LLC for tax filing purposes.
While individuals can use their social security numbers for personal tax purposes, the majority of businesses must use a federal tax identification number that we know of as an EIN.
Obtaining An EIN For Single-member LLCs
If your LLC is a single-member LLC, you may not need an LLC EIN.
If you run LLC as a sole owner from your home, you don’t need an EIN for it as long as you have opted to report your business dealings to the IRS as a “disregarded entity“. This is sometimes the only and default option for a sole proprietorship because the internal revenue service does not recognize such an LLC as a business entity.
If your business has any employees, then you must obtain an EIN for your LLC. Similarly, if you have no employees at a given time but plan to hire in future, you must apply for EIN at the time of hiring. You also have an option of reporting your single-member LLC as a corporation (as an S corp or C corp) to internal revenue service, and if you opt for this option, you will need to obtain an EIN for your business.
If you add a new owner or member to your registered LLC, you are bound to obtain an EIN at that time. Another interesting situation in which you must have an EIN – even when your LLC is a single-member – is paying your taxes to the Bureau of Tobacco, Alcohol, Firearms, and Explosives or if your LLC participates in one of Keogh retirement plans.
Other Reasons for EINs for Single-member LLCs
Apart from other reasons that have been discussed above, an EIN may also be a handy tool for the security of your business. When you use your social security number, you open yourself to critical identity theft. However, it is not the case with an EIN as it is not linked to any of your bank account or debit and credit cards.
A federal tax ID is also helpful in building the credit rating of your business. If you plan to open a bank account under your LLC’s name, many banks will require a tax number for your LLC.
As your LLC extends and your business grows, you may find that many companies that do business with you require your EIN. In some states, there is a requirement for your EIN to file income taxes for your LLC. Similarly, if you are filing for bankruptcy, you will need to have an EIN. If you are thinking about whether your LLC needs an EIN, always remember that all other LLCs that are not a single member has to have an EIN. This also includes all kinds of partnerships and corporations. For EIN, the only exception is a single-member LLC.
How To Get EIN For LLC?
It is not a complicated process to apply for EIN for LLC. You can apply for it online via mail, or fax, or on a call. An EIN may be a necessary part of doing business for your LLC, but it is also a helpful tool to help your business grow.
How To Find An EIN?
If you have already registered for EIN, there are many ways you can find your EIN if you’re struggling to find it. Your tax returns, old business loan applications, IRS letters, and payroll paperwork can help you in the LLC EIN lookup. You can also call IRS to assist you in providing your EIN.
EIN For Husband-and-Wife LLC
If you are a 2-member LLC owner owned by a husband and wife, and you are situated in a community property state, you are eligible for special taxation called a Qualified Joint Venture LLC.
Internal revenue service allows a husband-and-wife LLC to file for its taxes as sole ownership instead of a partnership. Spouses electing qualified joint venture status are then treated as sole proprietors for all federal tax purposes. Using the rules for sole proprietors, an employer identification number (EIN) is not required.
This helps in saving money in various tax and accounting costs. Similarly, you can also be eligible for many other benefits with a qualified joint venture LLC, depending upon your state.
Frequently Asked Questions
Here are some of the most frequently asked questions about employer identification number.
- Can I use the same EIN for multiple LLCs?
While you can have multiple businesses running under one LLC and use the same EIN for all of that business under one LLC that are alike, it is not possible to have one EIN for multiple LLCs. For each limited liability company, you will need a dedicated EIN that can only be used for the given LLC.
- Can I get an EIN without an LLC?
No. You will need to have a proper business entity on the record before applying for its EIN. It is because the IRS’ application form for an EIN asks you about the business that you want an EIN for, and unless you can provide one, you are not allotted an EIN.
- Can I change my EIN from a sole proprietorship to LLC?
If you already have a dedicated EIN for your Sole Proprietorship and are looking to change your Sole Proprietorship to an LLC, you will need to file for a new EIN from the IRS.
- How long does it take to get an EIN for LLC?
It all depends upon how you have applied for EIN for your LLC. If you don’t include a return fax number on your application, it will take about two weeks to get registered. As per IRS website guidelines, you can get your EIN immediately by applying online. Similarly, sending your form SS-4 to the IRS service centre for your state via fax will be responded to in about one week.