When you start an LLC, you may be asked to provide an Employer Identification Number, commonly called an EIN. You may need one to open a business bank account, hire employees, complete tax filings or apply for certain business licenses.
Despite the name, an EIN is not only for businesses with employees. Many LLCs are required to obtain one, while others choose to get one because it makes it easier to keep their business and personal finances separate.
Whether your LLC needs an EIN depends on the number of owners it has, how it is taxed and whether it has employees or certain federal tax obligations.
What Is an EIN?
An Employer Identification Number is a nine-digit federal tax identification number issued by the Internal Revenue Service. It is typically formatted like this: 12-3456789.
You may also hear an EIN called a:
- Federal Employer Identification Number
- Federal Tax Identification Number
- Federal Tax ID
- Business Tax ID
These terms generally refer to the same number.
An EIN identifies a business or other legal entity for federal tax and reporting purposes. The way a social security number applies to a person, an EIN applies to a business.
Does an LLC Need an EIN?
Many LLCs need an EIN, but not every LLC is required to have one.
An LLC will generally need an EIN if it:
- Has more than one member
- Has employees
- Elects to be taxed as a corporation or S corporation
- Must file certain employment or excise tax returns
- Needs an EIN to meet a bank, lender or licensing requirement
A single-member LLC with no employees may not be required to obtain a separate EIN for federal income tax purposes. However, many single-member LLC owners still obtain one for banking, privacy and recordkeeping purposes.
Does a Single-Member LLC Need an EIN?
A single-member LLC is an LLC with one owner. Unless it elects to be taxed as a corporation, the IRS generally treats a single-member LLC as a disregarded entity for federal income tax purposes.
This does not mean the LLC does not legally exist. It means the LLC’s income and expenses are generally reported on the owner’s federal tax return instead of on a separate federal income tax return for the LLC.
A single-member LLC may not need a separate EIN for federal income tax purposes if:
- It does not have employees
- It is not required to pay certain excise taxes
- It has not elected to be taxed as a corporation or S corporation
In those circumstances, the owner may be able to use their Social Security number for certain federal tax filings.
However, a single-member LLC will generally need its own EIN if it hires employees, has certain excise tax obligations or elects to be taxed as a corporation.
A bank, lender, payment processor or government agency may also require an EIN even when the LLC is not required to obtain one under federal income tax rules.
Does a Multi-Member LLC Need an EIN?
Yes. An LLC with two or more members generally needs its own EIN.
Unless the LLC elects another tax classification, a domestic multi-member LLC is generally treated as a partnership for federal income tax purposes. The LLC typically files a partnership tax return and provides tax information to its members.
Because the LLC has multiple owners and separate federal filing responsibilities, it should have an EIN assigned to the business.
Does an LLC Need an EIN to Hire Employees?
Yes. An LLC that hires employees generally needs an EIN, regardless of whether it has one member or multiple members.
The business uses its EIN to:
- Report employee wages
- Withhold federal income taxes
- Report Social Security and Medicare taxes
- Make federal employment tax deposits
- File employment tax returns
Business owners should obtain an EIN before they need to begin filing payroll tax forms or making employment tax deposits.
Do You Need an EIN to Open a Business Bank Account?
A single-member LLC might not be required to obtain an EIN for federal income tax purposes, but a bank may still require one before opening a business account.
Banks may request documents such as:
- The LLC’s formation document
- An EIN confirmation notice
- An operating agreement
- Identification for the LLC’s owners or authorized signers
- A certificate of good standing
Requirements vary by financial institution, so it is helpful to ask the bank what documents it needs before applying.
Maintaining a separate business bank account can also help an LLC demonstrate that its business finances are being kept separate from the personal finances of its owners.
Can You Get an EIN Before Forming Your LLC?
You should generally form the LLC with the state before applying for its EIN.
The legal name entered on the EIN application should match the name shown on the LLC’s official formation document. Applying before the state approves the LLC can lead to inconsistencies between the business’s state and federal records.
For example, the desired business name may be unavailable, or the state may require a change before approving the formation filing. Waiting until the LLC has been officially formed helps ensure the correct legal name is used on the EIN application.
How Do You Apply for an EIN?
You can apply for an EIN directly through the IRS. The IRS does not charge a fee to issue one.
Depending on where the business is located, available application methods may include:
- Applying online through the IRS website
- Submitting Form SS-4 by fax
- Submitting Form SS-4 by mail
- Applying by telephone by calling (267) 941-1099 when the principal place of business is outside the United States or U.S. territories
Eligible applicants with a principal place of business in the United States or a U.S. territory can generally use the IRS online EIN application. When the application is completed successfully, the EIN is typically issued at the end of the online session.
Save or print the EIN confirmation notice. Banks, licensing agencies, payroll providers and other organizations may ask for a copy.
What Information Do You Need to Apply for an EIN?
Before beginning the application, gather the LLC’s formation, ownership and business information. The application may request:
- The LLC’s exact legal name
- Any trade name or “doing business as” name
- The LLC’s mailing and physical addresses
- The state where the LLC was formed
- The date the LLC was formed
- The number of LLC members
- The reason for applying
- The LLC’s primary business activity
- Information about the responsible party
The responsible party is generally the individual who ultimately owns or controls the LLC or exercises effective control over its funds and assets.
A registered agent should not be listed as the responsible party simply because the registered agent receives legal and government documents on behalf of the LLC. The registered agent’s role is different from the role of the business’s owner or controlling individual. Learn more about what a registered agent does here.
Is an EIN Free?
Yes. There is no IRS fee to obtain an EIN.
If you purchase our Premium LLC Package, we’ll take care of obtaining your EIN from the IRS on your behalf. Once your LLC has been approved by the state, we’ll prepare and submit the EIN application so you can focus on getting your business up and running.
Adding EIN service to your formation package can save time and simplify the startup process, especially if you’re opening a business bank account or need your EIN quickly for other business activities.
How Long Does It Take to Get an EIN?
The processing time depends on how the application is submitted.
For eligible applicants, applying online is generally the fastest method. An EIN can typically be issued immediately after the online application is completed and validated.
Fax and mail applications take longer. Businesses that need an EIN for an upcoming bank account, payroll registration or tax filing should apply early enough to allow for processing.
Can You Use an EIN Immediately?
An EIN issued through the online application can generally be used immediately for many business and federal tax purposes.
However, it can take time for a newly issued EIN to appear in every IRS system. This may temporarily affect certain electronic filings or verification procedures.
Keep the EIN confirmation notice with the LLC’s permanent records. You may need it when opening financial accounts, applying for licenses, establishing payroll or confirming the business’s tax identification number.
Does an EIN Form an LLC?
No. Obtaining an EIN does not form an LLC or create a separate legal entity.
An LLC is created by filing the required formation document with the appropriate state agency. Depending on the state, this document may be called articles of organization, a certificate of formation or a similar name.
Obtaining an EIN is a separate federal step that generally occurs after the LLC has been formed.
- Form the LLC with the state.
- Obtain an EIN when required or appropriate.
- Complete any necessary state tax, licensing and employer registrations.
- Maintain the LLC’s ongoing state compliance requirements.
Applying for an EIN by itself does not provide the liability protections associated with forming an LLC.
Is an EIN the Same as a State Tax ID?
No. An EIN is issued by the federal government through the IRS. A state tax identification number is issued by a state tax, revenue or labor agency.
Depending on where the LLC operates and the nature of its business, it may also need to register for accounts involving:
- Employer withholding
- State unemployment insurance
- Sales and use tax
- Gross receipts tax
- Other state or local business taxes
Obtaining a federal EIN does not automatically register the business with state tax agencies.
Will an LLC Ever Need a New EIN?
An LLC does not normally need a new EIN simply because it changes its address, business name or registered agent. However, certain changes to the ownership or legal structure of the business may require a new number.
The rules depend on the LLC’s tax classification and the nature of the change. Before applying for another EIN, review the IRS requirements or speak with a qualified tax professional.
Applying for a new EIN unnecessarily can create multiple federal tax records for the same business and complicate future filings.
Common EIN Application Mistakes
Errors on an EIN application can create discrepancies in the LLC’s records or delay the business’s next steps. Common mistakes include:
- Applying before the LLC has been officially formed
- Entering a legal name that does not match the formation document
- Selecting the wrong business entity or tax classification
- Listing a nominee or registered agent as the responsible party
- Submitting multiple applications for the same LLC
- Failing to save the EIN confirmation notice
- Assuming an EIN also completes state tax registrations
Review the information carefully before submitting the application and retain copies of the LLC’s formation and tax records.
Should You Get an EIN If It Is Not Required?
For many LLC owners, obtaining an EIN is useful even when it is not strictly required for federal income tax purposes.
An EIN may make it easier to:
- Open a business bank account
- Apply for business credit
- Work with vendors and payment processors
- Complete certain licensing and tax forms
- Avoid providing a Social Security number on some business documents
- Prepare to hire employees
Because an EIN is available directly from the IRS at no charge, many single-member LLC owners choose to obtain one as part of setting up their business.
Keep Your LLC’s State Records Up to Date
Obtaining an EIN is only one step in establishing and maintaining an LLC. The company must also continue meeting the requirements of its formation state and any additional states where it is registered to do business.
These responsibilities may include maintaining a registered agent, filing annual reports, paying state fees and updating the state when certain company information changes.
Universal Registered Agents provides dependable registered agent services throughout the United States. We help businesses and law firms manage registered agent appointments, receive important legal and government documents and maintain reliable representation in the states where their companies operate.
Need a registered agent for your LLC? Contact Universal Registered Agents to learn more about nationwide registered agent service. Ready to set up your LLC? We can make it happen.
