If you are starting a new limited liability company (LLC), one of the first things you will need is to apply for a federal tax identification number from the Internal Revenue Service (IRS).
This number is known as an EIN, and it is used to identify your business for taxation purposes.
Many people mistakenly believe that LLCs do not need an EIN, but this is not true. In this blog post, we will discuss why you need an EIN and how to obtain one.
Why Do I Need an EIN for an LLC?
An EIN is required for all businesses with employees, regardless of whether the company is a corporation, partnership, or LLC. In addition, an EIN is also required for any business that is subject to excise taxes.
This includes businesses that sell alcohol, tobacco, firearms, or gasoline. If your LLC does not fall into any of these categories, you may still need an EIN for federal income tax purposes.
Additionally, an EIN is needed for an LLC because the IRS requires all businesses to get a tax ID number. The EIN is used to track the company's income and expenses, and it's used to file taxes.
If you're an LLC owner planning on hiring employees, you need to get an employer identification number (EIN) from the IRS. The EIN is used to report wages and other employment-related information.
Can You Have an LLC Without an EIN?
While it is possible to have an LLC without an EIN, it is not recommended.
If you do not have an EIN and need to file a tax return or open a bank account for your business, you will likely be required to use your social security number instead.
This can create problems down the road, as the IRS may view your business as a sole proprietorship instead of an LLC. It is, therefore, best to apply for an EIN as soon as you form your LLC.
Additionally, a business entity with a single member can operate without EIN. A single-member LLC is a disregarded entity for tax purposes and is treated as a sole proprietorship.
This means that the LLC doesn't file its separate tax return - the business owner/member reports all income and expenses on their individual federal tax return.
The LLC isn't considered a separate legal entity, so the owner is personally liable for any business debts or obligations.
What Comes First, LLC or EIN?
You need to form your LLC before getting an EIN. An EIN is only necessary if you have employees or are self-employed and pay taxes on your business income.
If you are starting and have not yet made any money, you do not need an EIN. You can use your Social Security number instead.
Once your LLC is formed, you can apply for an EIN by filling out IRS Form SS-16 and submitting it to the IRS. You can also apply for an EIN online at the IRS website.
It typically takes about four weeks for the IRS to process your application and send you your EIN letter.
Does a Single-member LLC need an EIN?
A single-member LLC is not required to have an EIN, but there are a few instances where you may want one.
If you have employees, you'll need to withhold employment taxes from their paychecks and send them to the IRS. To do this, you'll need to have an employer identification number (EIN).
The EIN is also required if you have income subject to self-employment tax.
If you're starting, it's probably not necessary to get an EIN for your LLC. But as your business grows and becomes more complex, you may find that having an EIN would be helpful.
FAQs
Does a Small Business Have to Have an EIN?
Unless you are a sole proprietor or an LLC without an employee, you need an EIN. An EIN (Employer Identification Number) is a nine-digit number assigned by the internal revenue service to identify a business entity.
Most businesses need an EIN, even if they don't have any employees. You can apply for an EIN online.
Is my EIN Linked to my SSN?
Your employer identification number (EIN) is not linked to your Social Security number (SSN). The EIN is a unique nine-digit number that the IRS assigns to businesses and other organizations. You use your SSN as your taxpayer identification number.
Should I use my SSN or EIN?
Generally speaking, an SSN is used for individual identification, while an EIN is used for business identification.
So if you are an individual entrepreneur or a sole proprietor, you would use your SSN as your tax ID number. But if you are a corporation or partnership, you would use your EIN as your tax ID number.
How to Obtain an EIN?
The best way to obtain an EIN is to apply online through the IRS website. You can also apply by fax or mail, but online is the quickest and easiest option.
When you apply for an EIN, you will need to provide some basic information about your business, such as the name and address of your LLC and the type of business activity.
You will also need to give the name and the owner's social security number.
You can also contact IncFile if you need help applying for an EIN. They can help you with the application process and ensure everything is filed correctly.
Our #1 Recommendation
