Every LLC business owner needs to have a social security number that can allow both the employers and the employees to file the taxes, deal with the payrolls, and many other functions. This unique number assigned to every Limited Liability Company business structure and the employees working under it is known as the EIN or the Employee Identification Number. Every LLC has a need for EIN, which is only issued by the IRS department of the US.
However, you can’t file for the EIN unless the entire LLC business entity registration process is completed and you have the legal document stating the operations, business name, date of formation, and other attributes. Filing for the EIN is definitely easy since you will have the EIN assistant with you. But, before that, you have to understand the requirement of your LLC business and act accordingly.
On this page, you’ll learn about the following:
When to Get an EIN for an LLC
Once your business corporation is established with all the attributes being mentioned clear in a legal document, all business owners will be able to apply for the EIN. But, before that, you will have to learn when exactly the EIN number is needed.
- If the business corporation has employees working under the parent name, it is essential for all business owners to submit an application for the EIN number since they will have to file the taxes and also check the payrolls.
- If your business corporation is multi-member based, the EIN number is essential since filing the tax returns, and the partnership report is not possible without the nine-digit number.
- If your business corporation is involved with the excising of the taxes on income, the IRS will ask for the EIN number of the notified taxpayer related to your business licenses.
Type of LLC Structures That Need EIN
Even though every LLC business structure will need the EIN, there are certainly exceptional cases where you won’t have to file for the number with IRS. Here, we have discussed when to file and when not to, based on the LLC business corporation type.
Sole Proprietorship LLC
If your LLC business is based on the sole proprietorship structure, you will have to file for the EIN only if you have employees working under the business name. However, if you are the only responsible party of the business, there is no need to file for the EIN. Also, since you will have the sole proprietorship with no other employees working, you won’t have to file the employee pension tax, and hence, there will be no need to file the EIN.
For a single-member LLC, you will have two conditions as a responsible party. If the company has no working employees under the business name, no EIN number is needed, and hence, you won’t have to go through the hectic process of filing the application. But in case your single-member LLC has employees, it is essential to file for the EIN, no matter how many employees you have.
For the multi-member LLCs, you need to file the EIN number, regardless of the employees working in your company, as a responsible party. Even if there is no working employee, you still need to have the EIN because, whether their multiple members, the tax is calculated based on the individual partnership profit report.
How Does an EIN Benefit an LLC
Truth be told, the EIN number acts as a specialized social security number for every LLC. It not only helps you in filing the taxes all the time but also manages the corporate veil and prevents identity theft. Since it is very important to have the EIN, we have explained here some of the perks of this number.
- Filing the taxes and avoid penalties
All the businesses need to file various forms of taxes, starting with the sales tax, the income tax, the pensioner tax, and so on. Every LLC business will need the EIN number to file these taxes. Without it, you will get tax penalties, which might not be good enough for your business’s growth and tax purposes.
- Protecting your identity
If you had to use the SSN number in your LLC business, high chances of identity theft would have developed. Since a unique number is needed for every financial transaction done by this type of business, you would have to use the SSN number frequently with no security. This is why having the EIN will help you to prevent the SSN number from getting public or, worse, stolen by hackers.
- Allowing you to maintain the corporate veil
A corporate veil is a logical business structure that allows the members of the LLC to protect their personal assets with having no liability to pay off the company’s debts and resolve the lawsuits. To maintain this corporate veil, you will need the EIN number at the earliest for your business entity.
- Open the business bank account
All the organizations need to have a separate bank account that will record all the transactions related to the LLC. With the EIN number in hand, you will be able to open the bank account easily.
- Get further business credits and easy loan approval.
Sometime in the future, you may be needing a loan for which maintaining all types of business credit is essential. EIN will help you to increase the business credit and also acts as a catalyst and speeds up the loan approval against your business accounts.
How to Find Employer Identification Number
You can find the Employer Identification Number from computer generated receipts issued by the IRS. You can also search for it through the IRS helpline at 800-829-4933.
If you want to open a bank account for your business, you’ll need an Employer Identification Number (EIN). The IRS issues Employer Identification Numbers to businesses that are eligible. You can apply for an EIN online, over the phone or by mail.
Obtaining an EIN is a free service that the IRS offers. However, the application process takes four weeks to complete. It is best to apply for the number when you register your business. Also, it is wise to get an EIN when you move to a new area or apply for a business license.
An Employer Identification Number is a nine-digit number that works much like a social security number. Businesses use the number to file taxes and to apply for permits. They also may be used to apply for a business loan. A business credit report is also based on an EIN.
Obtaining an EIN is important because it allows you to keep your personal information private. Many vendors and credit card companies require an EIN. It’s also a great way to protect your identity from identity theft.
Whether you need an EIN for your business or for your own taxes, the process is not hard to follow. After applying, the IRS will send you a notice confirming the EIN.
Usually, businesses are issued only one Employer Identification Number. If you have more than one, you should register them separately. Besides using the number to file taxes, you can use it to open a bank account for your business. In addition, an employer ID number can be useful to research information about your business.
Obtaining an Employer Identification Number is essential for most businesses. In order to obtain an Employer Identification Number, you’ll need to fill out an SS-4 form. This form requires you to provide the address of your business and the legal structure of your business.
Your employer identification number is a nine-digit number that is normally positioned above your name. It can be obtained from the IRS by calling, by mail, or by fax.
The IRS also provides a website that helps you find an EIN. You can search for an EIN by entering your business name, address, and date of formation. While you’re there, you can also learn how to set up a business account and how to form a corporation.
Getting an Employer Identification Number is important because it helps you to protect your business from identity theft. You can use it to open a business bank account, apply for permits, and more. Most importantly, it can help your business build a positive credit rating.
An EIN is also required by many banks and credit card companies. Obtaining an Employer Identification Number can help you save money on your taxes. Plus, it can help you avoid identity theft and allow you to give out a tax ID number that’s different than a Social Security number. Apply for an Employer Identification Number today!
How to Apply for an EIN
In order to apply for the EIN online application, you need to visit the official website of IRS, where you will get the EIN assistant. With the help of the assistant, you can easily file for the 9-digit ID numbers, and it will be displayed to you once the form is submitted with all the correct details. Try the application by mail or fax the EIN application form with other required documents to the IRS in case you are not in an emergency. For better knowledge, hiring an attorney will help you plan everything related to the EIN forms.
Employer Identification Number is an essential thing when you start your business. You may be wondering if your LLC needs to obtain an EIN or not. Yes, it is a mandatory requirement for any LLC to obtain EIN. If you have hired an LLC formation service provider then you do not need to worry about the EIN, they help you with that. But if you haven’t hired anyone yet, then you can apply for EIN by yourself through the IRS portal.