EIN Meaning – What Is Employer Identification Number?

What is an EIN: EIN or Employer Identification Number, or FEIN (Federal Employer Identification Number), is a nine-digit number assigned to every LLC in the United States. It is also known as an FTIN or Federal Tax Identification Number. An EIN is issued by the Internal Revenue Service (IRS), and every LLC must obtain an EIN for various purposes.

Obtaining an EIN does not incur any costs. It is a unique number assigned to all businesses by the IRS to facilitate the filing of various business taxes. In this article, you will read about how to get an EIN from the IRS or otherwise. It will answer all your questions related to the procedure for a foreign entity to obtain an EIN, the filing cost, etc.

Types of LLC Structures That Need an EIN

All LLC corporations must obtain an EIN sooner rather than later. Once you complete all the steps of forming the LLC, you can submit the EIN application to the IRS department. There are various LLC formation services that offer an EIN with minimal hassle. Based on the business structure, the requirement for the LLC EIN number will vary. Here, we have described the three most common LLC business types and their requirements for obtaining the EIN.

• Sole Proprietorship: For a sole proprietorship business structure, an EIN number is not required if the company has no employees and is not involved in filing pension tax returns. However, if your sole proprietorship LLC has employees working within it, an EIN number is mandatory.

• Single-Member LLC: For single-member LLCs, you won’t have to get the EIN number in case the company is void of employees or does have an excise tax liability. But if you have employees or plan to have some in the future, you need to get the unique number beforehand.

• Multi-Member LLC: For a multi-member LLC, since you wouldn’t have the sole authority of the LLC, you need to have the EIN number for filing the partnership profit returns.

How to Request an EIN?

Before you request the EIN, you must complete your LLC’s formation. Once the procedures are completed, you can proceed with the EIN filing process. In order to apply for the EIN online application, you need to visit the official website of the IRS, where you will get the EIN assistant. There are several ways to request an EIN.

Online Application

The easiest way of applying for an EIN is through the IRS’s online application system since it’s entirely paperless. This method is available only if the principal business/office or agency/legal residence is located within the United States (including its territories). To apply online:

1. Go to the EIN Online Application page on the IRS website.
2. Fill out all necessary information on the form, which includes the legal name of your business, the type of organization/entity, a reason why you’re applying, among others, and personal details about the responsible party, like SSN/ITIN, etc.
3. You must complete this application in one sitting, as there’s no option to save it midway through filling it out later.
4. Once submitted & validated successfully, you’ll get instant approval along with an assigned EIN from the IRS.

Fax Application

1. Download Form SS-4, Application for Employer Identification Number; fill it out completely.
2. Find out the fax number relevant to your state/territory from the “Where to File Your Taxes” section in SS-4 instructions.
3. Fax the filled-in Form SS-4 to the designated number provided above based on where you’re filing from.
4. Typically, if a fax number is provided, the IRS will respond within four working days, including the EIN details.

Mail Application

1. Download & fill out Form SS-4, Application for Employer Identification Number, correctly without any mistakes or missing information.
2. Check the correct mailing address according to your location/state/territory from the same section mentioned above, “Where to File Your Taxes” on SS-4 instructions.
3. Post completed Form SS-4 to the address provided above, depending upon where it should be sent for processing purposes, etc. – always double-check this detail before posting!
4. It usually takes around 28 calendar days (about four weeks) to process time via mail route; it is advisable to apply well ahead of time, as it is required to have an EIN in hand.

Telephone Application (International Applicants)

For applicants outside the US/territories with principal business/office or agency abroad: Contact the IRS via phone call at 267-941-1099 (not toll-free) between Monday-Friday Eastern Time 6 AM – 11 PM & provide all information asked for in Form SS-4 over the phone call itself.

The following are the requirements you need to fulfill at the time of submitting the EIN application to the IRS:

• According to the online application process, the form must have the taxpayer’s name, identification number, and social security number of the general partner, the grantor, or the principal officer.
• The responsible party to manage all the notifications, meetings, and future procedures must be an individual for a private LLC.

When Will the IRS Ask for an EIN?

Since all tax documents and reports are filed with the IRS, the government body may ask you about your EIN under certain circumstances. Here, we have discussed the occasions when you will have to display the number.

• If your LLC has employees, an EIN is mandatory for tax filing and business tax returns.
• For multi-member LLC organizations, an EIN is a must for filing the partnership return forms.
• EIN is also asked when the Limited Liability Companies have excise tax filings.

Why Should an LLC Obtain an EIN?

You can enjoy several benefits once you get your EIN number. It will give your LLC business the ultimate advantage to operate smoothly without facing any legal or judicial issues. Here are the additional details regarding obtaining the EIN after forming the LLC.

Helps in filing tax returns

First, with the EIN number, you will be able to file your tax returns easily with the IRS. In fact, all business finances conducted by your LLC will be supervised using the EIN only, and hence, this will allow you to file taxes properly without any mistakes.

Needed for hiring employees

For hiring employees, all employers will need individual EIN numbers so that their payroll can be set up every month. Regarding the business EIN, the IRS will need this number for tracking employee payroll taxes.

Maintains the corporate veil

With the EIN number, the LLC members will be able to protect their personal assets in the event that the business is sued or a lawsuit is filed against it. This is what a corporate veil means, which is essential for every LLC business.

Prevent any occasion of identity theft

For operating all the taxations and finances of your LLC, you will use the EIN. This way, your social security number can be kept safe from identity theft.

Helps in opening a business bank account

Since you will have to open business accounts after forming the LLC, you will need the EIN number for the same. Additionally, to obtain business credits and licenses, you will need this nine-digit unique ID.

Gain additional business credits and secure easy loan approval

Sometime in the future, you may need a loan, for which maintaining all types of business credit is essential. EIN will help you increase your business credit and also acts as a catalyst, speeding up the loan approval process for your business accounts.

Can I Get a Free EIN?

If you want your EIN sooner, and that also without having to pay any type of fee, you need to sign up with the EIN assistant at the IRS and follow the entire procedure for application. Only U.S.-based citizens can apply for the EIN number with the IRS. Additionally, you can only submit one application per day. Once the entire form is filled out and submitted, your EIN number will be displayed. As for applying via mail or fax, you need to download the SS-4 form and fill up the details before submission.

How to Obtain an EIN for a Foreign LLC or a Foreign-Owned Corporation?

The following is a step-by-step guide for obtaining an EIN for a Foreign LLC:

1. Eligibility – Any person applying for the EIN must have a valid Taxpayer Identification Number, e.g., SSN or ITIN; only then can they apply for EIN.
2. FORM SS-4 – If a foreign entity does not have a Tax Identification Number, it will have to fill out the Form SS-4, an EIN application. This form is for foreign applicants who do not have a Social Security number or a physical address
3. Filing the form with the required information – To be able to apply for the EIN, the following information has to be filled out correctly in the application form:
   – Legal Name & Address of the Business
   – The type of Business Entity
   – Reason for the application for an EIN- The name of the country where the business is incorporated
   – Number of employees
   – The industry in which the LLC does its business
   – Accounting Information
4. Ways to apply for EIN–
   • Online – An EIN can be obtained by applying online on the IRS website.
   • By phone – A foreign entity or LLC can apply for an EIN by calling 267-941-1099, which is NOT a toll-free number.
   • By Fax – An EIN can also be obtained by fax. The LLC willing to obtain the EIN can fax Form SS-4 to 304-707-9471
   • By Mail – A completed form can be mailed to the Internal Revenue Service (IRS), Attn: EIN Operation, Cincinnati, OH 45999.

Mistakes One Should Not Make While Applying for an EIN

• Applying for an EIN before forming an LLC in the state
• Providing incorrect or incomplete information on the application
• Using the wrong filing method
• Applying before determining the taxation structure
• Failure to keep records properly

FAQ

In Conclusion

Obtaining an EIN for a domestic LLC and a foreign LLC is absolutely necessary, irrespective of the state you’re located in. This number is required to conduct business, open a business bank account, report taxes to the IRS, and other similar purposes. EIN is any business entity’s Social Security Number that is mandatory to transact business.

If you’re expanding your business to other states or beyond domestic territory, you must also obtain an EIN for a foreign LLC. Although there are many convenient ways to obtain your EIN, there are specific rules for foreign entities. Make sure you follow them before applying for your EIN.