Just like an SSN, the EIN number is a special tax ID assigned to businesses by the Internal Revenue Service. It's not just for business taxes.
An EIN number is used to identify your business on any legal documents, so you'll need one before you can get into any serious dealings with anyone else in the world of commerce.
A taxpayer identification number or employer identification number (EIN) is a tax identification number used to identify an American business.
What Is the Purpose of an EIN?
A federal tax ID number is also called an Employer Identification Number (EIN) or Taxpayer ID.
The EIN is a unique nine-digit number that identifies your business and can be used for tax filing purposes.
An EIN does not expire unless the business entity has dissolved/canceled its status with IRS.
Even if your LLC is inactive, your federal tax identification number remains active.
You may need to provide your EIN to banks when applying for a business loan for your LLC, vendors, and other businesses when opening a business account or transacting business.
If you are not sure whether you should apply for an EIN, check with the IRS.
Applying for a business license is also one of the reasons why you might need an employer identification number.
You can find out more about business licenses in your area by contacting your local chamber of commerce or visiting their website.
A limited liability company is under the obligation to file tax returns, no matter if it chooses to be taxed as a sole proprietorship, partnership, or corporation.
You will need to provide your business tax ID number on the tax return, whether filing it yourself or hiring a tax preparer.
Even if you own a single-member LLC or a multi-member LLC with employees, you will need a federal tax ID.
The Internal Revenu Service website has an extensive list of categories requiring an EIN application.
Some of them include business entities that pay excise taxes, withhold taxes on income, or do business in real estate.
Visit the IRS website for a detailed list of business entities that need an EIN.
What Can’t You Do Without an EIN?
With an EIN, you won't be able to file taxes for your LLC. Missing out on your tax obligations is a serious issue and can lead to big fines down the road.
You also won't open a business bank account without an EIN, which is essential for taking payments and managing your finances.
An LLC that uses the owner's personal bank account to perform business transactions risks losing liability protection. As a consequence, your personal assets might be jeopardized.
Finally, you'll need an EIN if you want to hire employees for your LLC. Without it, you'll be limited to hiring an independent contractor only.
The IRS uncovers any discrepancies between what they think should be filed and what has been reported; they will contact you for more information and possibly impose fines and penalties for noncompliance.
How to Get an Ein for LLC?
There are several ways you can obtain a company's EIN. If you decide to do it online, you must fill in an Internet EIN application through the IRS website.
This option grants instant access to your EIN and only U.S. entities.
Applying by fax or by mail are two additional options. To apply by fax service, you will need to fill in Form SS-4, available on the IRS website.
The completed form and all required documents should be sent to a fax number (855) 641-6935.
Depending on your location, you can receive the company's EIN within four business days or longer.
Applying by mail is the third option to consider when applying for a company's EIN. In this case, you will need to fill in Form SS-4 and send it via postal service along with all required documents.
The IRS recommends that you use certified mail so that they receive your application within 15 days of being mailed.
Send your mail to Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999. The processing time frame for e-mail applicants is around one month.
International applicants can apply by phone. This option is available only to non-U.S. entities.
Please note that you can call the IRS at 267-941-1099, Monday through Friday from 0800 AM until 1800 PM local time or Saturdays from 12.00 am until 5.00 pm local time (except national holidays).
If you have any doubts about the EIN application process, please consult with an accountant, or tax specialist or contact the Business & Specialty Tax Line.
They will help you through the process and make sure that everything is filed correctly.
Who Can Apply for an EIN?
The IRS needs to identify entities or individuals applying for the employer identification number.
A responsible party of the LLC must apply for the EIN.
The responsible party is usually a manager or member of the company or a corporate officer if you own a corporation (C or S corporation).
The following individuals can also apply for a business's EIN:
- A sole proprietor
- Partners in a partnership
- Shareholders in a corporation
- An authorized individual on behalf of a nonprofit organization or estate
- A trustee on behalf of a trust
- An executor on behalf of a decedent's estate
The EIN is free to apply for and can be applied online, by mail, or by fax.
You will need some general information about your company, such as the business name, address, and contact information.
How to Perform an EIN Number Lookup?
To check an EIN belonging to an existing business, you can search for it by name, city, or state.
Your previously filed tax return, business credit report, checks for business loans, or bank statements are good places to start.
Contacting the IRS directly can also help you confirm an EIN. You can call the Business & Specialty Tax line Monday through Friday, from 07:00 am to 11:00 pm EST.
The quickest way to get confirmation of an EIN is to use the "EIN Verification Service" on the IRS website.
This process requires an authorized representative's identification procedure. Call the IRS at (800) 829-4933, and the IRS representative will ask you for personal information over the phone.
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FAQs
How Can I Get a Copy of My Ein Confirmation Letter?
It depends on how you obtained the EIN in the first place. If you applied for the EIN online, you could access your confirmation notice through the IRS website.
If you apply by mail, the IRS will send you a copy of your EIN confirmation letter within four weeks of receiving your application.
Is It an EIN Public Record?
Yes, EIN is a public record because it is associated with the company name.
The IRS makes EIN information available to the public to promote transparency within businesses and help prevent identity theft.
Should I Get My EIN or LLC First?
You should and must set up an LLC first because the IRS will assign you a Taxpayer Identification Number (EIN) as soon as you have formed your LLC.
You can't apply for an EIN without first forming the business entity, i.e., creating a legal company with articles of organization and operating agreement in whatever state it's registered in.
Is EIN Free for LLC?
Yes, the EIN number is free for LLCs. The IRS issues the EIN, so there is no cost associated with obtaining one.
Simply visit the IRS website and apply for an EIN online.
It typically takes a few business days to receive the EIN once you have applied.
Is an EIN the Same as a Tax ID?
Yes, an EIN is the same as a tax ID. An EIN is also known as a federal tax identification number.
This number is used by businesses to identify themselves for tax purposes, hire employees or apply for small business loans.
If you have formed an LLC, you will need to apply for an EIN if you qualify for any requirements.
How Many EIN Numbers Can You Have?
Each business entity is issued one EIN number. This includes corporations, limited liability companies (LLCs), and partnerships.
If you have multiple business entities, each will need its EIN number.
Apart from sole proprietors without employees, you cannot use your social security number for your business entity.
The IRS uses the EIN number to identify taxpayers who must file tax returns. The EIN number is also used to identify a business owner for employment tax purposes.
Can I Open a Business Bank Account With Just an Ein?
No, you will need to provide your LLC's full legal name and address to open a business bank account.
Your EIN number is not enough. However, once your LLC is established, you can use your EIN instead of your social security number on all official documents and transactions related to your business.
This includes filing taxes and opening other accounts.
Is My Ein Linked to My SSN?
An EIN is your LLC's social security number. SSN can be used with the IRS if you run a sole proprietorship.
If you form an LLC, want to hire people, or wish to build business credit, however, you'll need to get an EIN.
Can I Get a Business Loan With Just an EIN?
Yes, a lender may use your personal credit score when determining whether or not to grant you a loan.
However, a business loan will require a personal guarantee from you to be approved.
The application process can take several days or weeks, depending on the lender and their requirements for approval.
However, there are certain circumstances where your EIN will not be used instead of your personal credit score.
Keep in mind that they won't simply utilize your EIN alone; many other criteria need to be met before you can get approved for a loan.
Is Your EIN Number the Same as Your Tax-Exempt Number?
No, your EIN number is not the same as your tax-exempt number. The two numbers are used for different purposes.
Your EIN number is used to identify your business, while your tax-exempt number is used to exempt your business from paying taxes.
If you have any questions about which number you should use, contact an accountant or lawyer.
Can I Change My LLC’s EIN?
Yes, but only in certain circumstances. You can't change your LLC's existing EIN if it's been assigned to a tax-exempt organization or if it's already in use by another business.
Suppose you or your business undergoes any changes, such as a name change or the responsible party.
In that case, you must submit Form 8822-B, Change of Address, or Responsible Party – Business to IRS to notify them of the change.
Some companies, such as sole proprietorships, might need a new EIN if they change their structure to partnership, become subject to a bankruptcy proceeding or choose a different tax election (corporate).
LLC and Ein Number: Conclusion
The process of obtaining an EIN and understanding how it affects your business finances can be complicated if you are new to the world of LLCs.
The EIN is not just a number assigned to your company; it's the backbone of your business.
It provides information about where you are in the world and what kind of organization you have set up for yourself.
When obtaining an EIN for a new LLC, quite a lot goes into getting this done right, so make sure to consult IncFile who can guide you through all steps necessary.
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