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.
Whether you are just starting your own business or have been operating for years, you will need an Employer Identification Number (EIN) in order to file your taxes. You can find an EIN for free through the IRS. The EIN is similar to your social security number and is used for federal tax filings and reporting. You can also use your EIN for financial accounts in the name of your business.
Obtaining an EIN is easy, and you can find an EIN online. Your business may need it to open bank accounts, apply for business licenses, or apply for credit. Your EIN will be included on applications for these services. It will also appear on your business tax return, if you are required to file one. It is also required for other situations.
Obtaining an EIN is free, but you will have to pay taxes on any income you have received from your business. You will also have to register your business with the NYS Department of Labor after you receive your EIN.
You can get an EIN by submitting Form SS-4 to the Internal Revenue Service. The form can be filed online, by mail, or by fax. The IRS can also issue changes to your EIN through mail or by fax. They also limit the number of EINs issued each day.
You may also receive an EIN on your prior year tax return. This is often used by nonprofit organizations for claiming tax deductions. You can also get an EIN by visiting a financial institution that has stored your EIN. You may also get an EIN from your HR department. You can also get an EIN on your 10-K report from a publicly traded company.
The IRS will issue your EIN to you as soon as possible. It is important to obtain an EIN before the end of the year. In the future, you may be required to provide your EIN to apply for a business license, business bank account, or business credit card. You may also need it when applying for permits or to report independent contractor work.
The EIN is a nine-digit number that is assigned by the IRS. It is similar to your social security number, but the IRS does not use your EIN as your social security number. The IRS will use it instead to identify your business. You can also use the EIN to research information about your business.
An Employer Identification Number is also used by the IRS to report employment taxes. You may need an EIN if your business has one or more employees, or if you are withholding taxes from an income paid to a non-resident alien. You may also need an EIN if you are a nonprofit organization or are a sole proprietor. The IRS will not give you an EIN if you do not meet the requirements.
The EIN can be used to separate your business finances from your personal finances. This is important, especially if you are a sole proprietor or do not want your business to be listed on your tax return. You may also want to use your EIN to replace your personal Social Security number, if you want to establish business credit.
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.