What is the next step after establishing your LLC for your company? Have you heard about obtaining an Employment Identification Number (EIN) for your LLC?
You may have a lot of questions regarding an EIN for an LLC. For example, when does an LLC require one? What exactly is an EIN, and what does it do?
What is an Employment Identification Number (EIN)?
An Employment Identification Number (EIN) is required for all businesses that have employees. It is a 9-digit tax ID number, consisting only of numbers and no letters, and can also be referred to as a Taxpayer Identification Number. This number allows your business to open a bank account, file taxes, and more.
Without a tax ID number, some banks will not allow your company to open a business bank account. The EIN serves as the identification number for both employees and employers.
When Do You Need an EIN?
According to Venture Smarter, a popular online site known for comprehensive business guides, you need an EIN after you have finished forming your LLC, but before opening a bank account or hiring employees. Even if you plan on working solo or with just one other person, you will still need to obtain a tax ID number.
If your LLC is owned by more than one member who is not married to each other, they are considered co-owners rather than employees, but if any of the members are employed by the LLC, it must have its own EIN.
Applying for an EIN
The first step is to fill out The Internal Revenue Service Form SS-4. This form is available from the IRS website. You can submit your application by mail, over the phone (only for international applicants), or through a fax machine.
Online Application
You can also apply for your Employer Identification Number online. To do this, you must have a valid email address and phone number where the Internal Revenue Service can reach you in case there are any questions about the application.
Mail Application
If you choose to submit your application by mail, then simply fill out IRS Form SS-4 and include it in the envelope along with the required documents.
You will find the list of documents on the last page of the form, but most applicants need their articles of formation or certificate of formation for domestic LLCs.
If you are applying for an Employer Identification Number for an LLC that does not yet exist, then you must include a signed statement from all the members or managers in your new LLC stating that they intend to form a company.
Fax Application
If you choose to submit your application by fax, make sure to follow the instructions carefully and always double-check your work. When filling out IRS form SS-4, be sure to include your fax number in the employer identification number (EIN) box on page 1 of the form.
Telephone Application
The only way to apply for an EIN over the phone is by calling 267-941-1099.
Once your application has been processed, you will receive a letter from the IRS with your EIN. This number can be used when filing taxes, opening a bank account, and hiring employees.
Completing the EIN Application Form
The application process is pretty straightforward if you are a single-member LLC. However, when an LLC is a corporation or a partnership, it is a little tricky. Follow the steps below to complete the application.
1. Enter the LLC’s business name.
This is the name you should use when signing documents with your LLC, which will be in its Articles of Organization.
2. If the LLC has a trading name, include it here.
A trade name is a disguised name known as “doing business as” or DBA.
3. Name the LLC responsible party.
This is either the owner or a managing member.
4. Enter the LLC’s mailing address.
5. If the LLC’s business address differs from the mailing address, include it here. Do not input a P.O. box number. A physical street address is acceptable.
6. Enter the county where the business is.
7. Include the name and Social Security Number of the responsible party.
8. Indicate if the EIN is for an LLC.
Mention the number of LLC members.
9. In the “Name of Company” field, choose your business entity.
Whether it is a disregarded entity for a sole proprietor, a corporation, or a partnership.
- Check the “other (specify)” box if you are a single-member LLC (SMLLC) and want to be taxed as a sole proprietorship for federal tax purposes. Then input “Disregarded entity – sole proprietorship.”
- Assume you’d prefer to have the LLC taxed as a corporation. In that situation, you file Form 8832 to qualify as a corporation or Form 2553 to select the S-corporation status. Then check the box labeled “Single-Member Corporation.” Also include your tax return, either Form 1120 or 1120-S.
- The LLC might choose to be taxed as a partnership or a corporation, depending on its structure. For federal tax purposes, select “partnership” or “corporation.”
10. Use the Reason for Applying section to explain your situation
For example: starting a new business or hiring employees.
11. Please enter the first business date.
If you acquired the firm, list the acquisition date.
12. Include the final month of the accounting year in the calculation.
If you’re using an accounting period of January 1 through December 31, for example, enter December. However, if your account begins in the middle of the year or another month, input it here.
13. Guess how many people will be employed.
If you don’t know, enter zero.
14. Indicate the amount you believe you will owe in employment taxes.
If you expect your expenses to be $1,000 or less in a year, check the box.
15. Enter the first date you paid out any wages or annuities.
16. Check the box that corresponds to your firm’s main activity.
If your business does not appear, check the “other” option and describe the core purpose of your company.
17. Explain the core items or services offered.
18. Please indicate if this limited liability company has already applied for and been given an EIN.
Finally, type your name, title, phone number, and fax number. Then sign and date the form.
FAQs
Is EIN free for LLC?
Yes. The IRS does not charge for individual LLCs to get EINs. However, your state might require you to pay a fee or file paperwork when you apply for an EIN.
Do you get an EIN before or after LLC?
Most states require you to obtain an EIN before you file your LLC’s Articles of Organization.
What are possible reasons for getting an EIN?
You’ll need the responsible party’s SSN if they are not a sole proprietor or single-member LLC. You might also apply for an EIN when starting a business, hiring employees, or other special reasons.
Is there a difference between an EIN and a TIN?
No, they are the same. EIN stands for Employer Identification Number. TIN means Taxpayer Identification Number.
Conclusion
The process for applying for an Employer Identification Number (EIN) is simple, but it can be time-consuming since you have to enter all the necessary information. If you are looking to file your LLC in a particular state, check with your Secretary of State to see what the rules are before filing your Articles of Organization. Also, keep in mind that most states require LLCs to register as separate business entities before applying for an EIN. If you are running a sole proprietorship, check with your local IRS office to see what taxes apply to your situation.
