To obtain EIN for Texas foreign LLC one has to follow a few steps. Limited Liability Companies are easier to form than other structures of business. However, it is a bit tricky for the LLCs to form a foreign LLC in any of the states. There can be some restrictions for the Foreign LLCs to form an LLC in Texas. Take a look at this article to know about how to obtain EIN for your foreign LLC. It will answer all your questions related to EIN, including the procedure for a foreign entity to obtain EIN, the filing cost, etc.
On this page, you’ll learn about the following:
- What is a Foreign Limited Liability Company?
- What is an EIN (Employer Identification Number)?
- EIN for a Foreign Entity or Foreign LLC
- Restriction in Business For Foreign Entities in Texas
What is a Foreign Limited Liability Company?
An LLC is always formed in accordance with the state rules. The state where the LLC is formed is often referred to as the main state for the LLC. It is where the LLC has its main operational center. When the LLC business members are trying to expand the LLC & wish to form it in some other states as well, the LLC is a foreign entity in the new state. The LLC is formed in the new state will be referred to as “Foreign Entity” or “Foreign Corporation” or “Foreign LLC.” Forming the Texas Foreign LLC is easier & involves obtaining an EIN.
What is an EIN (Employer Identification Number)?
An EIN or Employer Identification Number works as a Social Security Number for your business. An EIN is a unique 9 digit identification code issued to businesses, by the Internal Revenue Service (IRS) of the U.S.S., for tax filing & reporting purposes.
Are EIN, FTIN & FEIN the same?
An Employer Identification Number (EIN) is also called a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN). So, there is no difference between these three.
Why Does a Business Need EIN?
An LLC will require EIN for the following reasons:
- To file Tax returns – EIN makes it easy to file the tax returns with the IRS. The IRS uses EIN to supervise all the business finances of the LLC.
- To Hire Employees – To hire employees in the LLC, an Employer will need the EIN. EIN lets the employers set the payrolls of the employee fo every month. IRS tracks the employee’s payroll taxes with the help of the EIN.
- To maintain the corporate veil – In an event where someone has sued the LLC or has filed a lawsuit against it, the EIN protects members’ assets. EIN is an essential part of the company’s corporate veil, which differentiates the business entity from its members.
- To protect the individual Identity of the member – The Limited Liability Company uses EON for all its taxation & finances. Nowhere in the financial process does an LLC use an individual’s Social Security Number; hence the Identity of individual members is kept safe.
- To open a business bank account – Without the EIN, an LLC can’t open a business account. It is essential to get an EIN even for the business credits & business licenses.
When Does IRS Ask for EIN (Employer Identification Number)?
The taxation documents & reports are filed with the IRS, which requires an LLC about its EIN in the following circumstances.
- An EIN is mandatory for an LLC with employees for tax filing & tax returns.
- If the LLC is a multi-member business entity, EIN is required for drawing the partnership return files.
- An EIN is also asked for excise tax filing.
EIN for a Foreign Entity or Foreign LLC
If someone is a foreign person or if the LLC is a foreign LLC, EIN allows them to start the LLC even without the Social Security Number. EIN allows the member of the foreign LLC to collect a payment, distribute the cash in the company & out of the company, hire employees & report or file taxes.
How to Obtain EIN for a Foreign LLC or a Foreign-Owned Corporation?
Following is a step-by-step guide for obtaining an EIN for a Foreign LLC:
- Eligibility – Any person applying for the EIN must have a valid Taxpayer Identification Number, e.g., SSN or ITIN; only then can he apply for EIN.
- FORM SS-4 – If a foreign entity does not have a Tax Identification Number, it will have to fill-up 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
- 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
- Ways to apply for EIN Texas–
- Online – An EIN can be obtained by applying online on the IRS website.
- By phone – A foreign entity or LLC can apply for EIN by calling on 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.
Restriction in Business For Foreign Entities in Texas
In Texas, a context of a foreign LLC is an LLC formed in another state. The word foreign does not mean an LLC from another country; it just means an LLC was recognized by the laws of some other U.S. state.
Transacting Business In Texas
Although the State of Texas does not define the term “Transacting Business,” it does talk about foreign LLC having a physical presence in – or a nexus with- the state. For it to collect state sales tax on all of its sales.
In a Nutshell, a foreign LLC is transacting Business in Texas if it has:
- a warehouse in Texas
- a store in Texas
- an office in Texas or
- a sales representative in Texas
Registering the Business
A foreign LLC has to register its business in Texas via an application for registration for the Foreign Limited Liability Company with the Texas Secretary of State.
Effect of Non-registration
If a foreign LLC is not registered under Texas Law:
- It may not be able to file a lawsuit in the court
- It can be subjected to a civil penalty equivalent to all the taxes & fees that it should have paid while registering, with some additional penalties, interest, & late filing fees.
- It doesn’t invalidate the LLC’s contracts or restrict an LLC from defending a lawsuit in Texas.
How Fast Can You Obtain EIN for Foreign LLC in Texas
An EIN for foreign LLC in Texas can be obtained by immediately if applying online and by mail or fax it may take up to 1 week.
Starting a business can be both exciting and daunting at the same time. There are numerous tasks that need to be completed before one becomes an official business entity. One of the most important things to be done is obtaining an Employer Identification Number (EIN). It is an identification number issued by the Internal Revenue Service (IRS) that is used to identify businesses for tax purposes.
Generally, it is a quick and straightforward process to obtain an EIN for domestic LLCs (Limited Liability Companies). However, for foreign LLCs, the process could take longer due to additional paperwork needed for verification.
The timespan required to obtain an EIN for foreign LLCs in Texas may vary. Some factors like the type of LLC, the availability of information, and the rigor of the verification process can influence the time needed to get an EIN.
The first step is to ensure that all the necessary documentation is available. Everything from incorporation documents to personal identity paperwork should be checked and rechecked before sending off an application to the IRS. A minor error can delay the process of EIN issuance. Therefore it’s essential to double-check all paperwork before filing.
Foreign LLCs must provide additional information to be verified by the IRS, to make determinations of the foreign LLC’s classification, such as articles of association and a registration confirmation, making the process somewhat more rigorous than most. Thus, ways to expedite the verification process may not be possible for foreign LLCs.
Time-wise, the application process may take anywhere from about three days to two weeks or more. However, inexperienced business owners may face complications and find ourselves pushing past that time limit and facing delays.
Entrepreneurs should bear in mind that when missing the deadline for payment of employment taxes, the financial implications could come with penalties or interest charges, adding more reasons to aim to get an EIN promptly.
Another option to facilitate the application process and quicken the granting of an EIN is to engage the services of an experienced international tax specialist. Granted, it may come with additional charges, but choosing the right specialist can make a real difference for those who lack experience in navigating IRS processes. Such professionals can provide effective guidance, tailored support, and much-needed conflict resolution during the EIN application process for foreign LLCs.
Finally, planning ahead can be beneficial too. Starting early may remove the pressure to sail through the hasty process of EIN application intake and into verification just before launching – making it a crucial consideration of planning your service options.
In conclusion, obtaining an EIN for foreign LLCs may take a bit of time. This is mainly because of the additional required documentation and the scrutiny involved in establishing a foreign LLC in Texas. Therefore, foreign business owners should try to plan ahead, gather all the necessary information in good time, and work with international tax specialists where necessary. After acquiring an EIN for the foreign LLC in Texas, entrepreneurs should ensure compliance with all applicable federal and state tax payment requirements.
To obtain EIN for your foreign LLC, you have to apply for it from IRS. Fill up the Form-SS4 and send it via phone, fax mail or submit it online.
If you’re a self-employed individual then you do not have to obtain EIN, you can use your social security number to form an LLC.
EIN and TIN (Tax Identification Number) are the same things. IRS issues both the identification numbers to the businesses. It is an eight-digit identification number issued by the IRS.
It is not mandatory to have a third-party designee obtain EIN. A third-party designee is an individual appointed by the LLC. That person will be responsible for fill-up the form SS-4 by answering all the questions and also can receive the issued EIN if applied by phone.
Obtaining EIN for any Texas foreign LLC is a must. This number is required to conduct business, open up a business bank account, report the Taxes to IRS, and so on. EIN is any business entity’s Social Security Number that is mandatory to transact business.