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.
The first method to obtain an EIN is by applying online through the IRS website. This user-friendly platform provides a quick and efficient way for business owners to get their EIN in a matter of minutes. By navigating to the IRS website and locating the EIN application, applicants are guided through a series of questions that help determine the appropriate form to use. This resourcefulness has made applying for an EIN simple, accessible, and hassle-free, saving entrepreneurs precious time and effort.
Another way to find your EIN is by checking previous tax documents or similar paperwork provided by the IRS. It is common for your EIN to be listed on previous tax filings or other official correspondence from the IRS. This is particularly useful for established businesses or individuals who have already dealt with the IRS before. By retrieving these documents, business owners can easily locate their EIN and use it for various purposes, such as payroll processing, tax reporting, and opening bank accounts.
In case you are unable to locate your EIN using the above methods, another recourse is to reach out to the IRS directly. Their dedicated helpline specifically designed for assisting businesses in need of their EIN can be a valuable resource. Friendly and knowledgeable representatives are available to provide guidance and help retrieve your EIN information by verifying your identity through a series of questions. Although this method might require a longer processing time compared to the previous approaches mentioned, the end result is a sense of relief by acquiring the required information directly from an authoritative source.
It is worth highlighting that having an EIN is vital for every business entity operating in the United States. It serves as a unique identifier that distinguishes your business, specifically for taxation purposes. Whether you are a sole proprietor, partnership, corporation, or limited liability company (LLC), obtaining an EIN is indispensable. For instance, an LLC must obtain an EIN to open a business bank account, process payroll for employees, and file tax returns. Without an EIN, a business may face significant difficulties when trying to meet their legal obligations and other financial transactions.
In conclusion, understanding how to find your Employer Identification Number is a crucial step in establishing and operating a successful business. The availability of online applications, past tax documents, and IRS assistance are all viable options for obtaining this essential identification number. By adhering to the necessary requirements to obtain an EIN, entrepreneurs can navigate through complex tax regulations smoothly and effectively, while ensuring legal compliance and facilitating various financial aspects of their business operations.
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.