To obtain EIN for Alabama 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 Alabama. 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 Alabama
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 Alabama 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 Alabama–
- 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 Alabama
A foreign entity or a foreign investment company in Alabama may not face any restrictions while doing business in Alabama. Alabama State has not laid down any prohibitions pertaining to a specific country or state doing business in Alabama.
Transacting Business In Alabama
Although the State of Alabama 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 Alabama if it has:
- a warehouse in Alabama
- a store in Alabama
- an office in Alabama or
- a sales representative in Alabama
Registering the Business
A foreign LLC has to register its business in Alabama via an application for registration for the Foreign Limited Liability Company with the Alabama Secretary of State. A foreign entity has to register in Alabama If the Entity is either:
- A foreign entity that requires Filing of certification of formation if formed in Alabama. Or
- An entity that offers limited liability to any member or owner under the law of formation within its original state’s jurisdiction
Effect of Non-registration
If a foreign LLC is not registered under Alabama Law:
- It can not file a lawsuit in any of the courts in Alabama
- It may be subjected to late filing fees & an order of restraint can be passed by the state, which will stop the foreign LLC from doing any business in the state of Alabama.
- It doesn’t invalidate the LLC’s contracts or restrict an LLC from defending a lawsuit in Alabama.
- It can not waive off the Limited Liability of the members of an LLC.
How Fast Can You Obtain EIN for Foreign LLC in Alabama
Before you can legally operate in Alabama, your foreign LLC must have a certificate of authority from the state where it is registered. This certificate is called an Employee Identification Number (EIN). When you have an EIN, you can operate in another state with it. The process to obtain an EIN is not difficult. You can do it online by paying about $150. You can also do it in person if you prefer.
The next step in the application process is to choose a name for your LLC. You can either spell out the name exactly or omit special characters, but if you use a foreign name, you must spell it out. Then, you need to fill out the information required for your LLC and select your state and business. After filling out your information, you can submit it. The IRS recommends taking a screenshot of the final page. You will then be assigned your EIN and receive a confirmation letter.
If you are going to conduct business in Alabama, it is essential that you have a foreign-qualified entity. Whether it is an LLC or a corporation, a foreign LLC will be required to file a registration application with the Alabama Secretary of State’s Business Entity Division. You must pay a filing fee of $150, which can be done online or through the mail. Additionally, all Alabama businesses are required to obtain a business privilege license, which is issued by the county probate judge. In addition to obtaining an EIN for a foreign limited liability company in Alabama, you will need to get federal and state licenses. You can check these with a professional service or with a company that provides these services.
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 appoint a third-party designee to obtain EIN. A third-party designee is an individual appointed by the LLC. That person will be responsible for filling 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 Alabama 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.