How to Get an EIN for an LLC

You use it to register your LLC to report taxes, bank, employ workers, and a myriad of other formalities. Regardless of whether you are creating a brand new LLC, or formalising an existing LLC, you should know how and when to acquire an EIN. This guide presents a description of what is an EIN, why your LLC might require it, application process, and post-receipt.

What Is an EIN?

An EIN is a 9-digit federal tax identification number allocated by the IRS It is applied to define those business entities that are registered within the United States. IRS involves the use of EINs to monitor the tax liabilities, returns and payments by a company.

Although personal taxation involves the use of Social Security numbers, business (including LLCs) involves the use of EINs to keep business and personal finances separate.

Does Your LLC Need an EIN?

Not every LLC is legally obliged to receive an EIN but the majority of them should. An LLC that has more than one member or intends to employ workers or simply wishes to be taxed as a corporation requires an EIN.

The owner may technically use his or her Social Security number to pay taxes as a disregarded entity, single-member LLCs with no employees. Nevertheless, most single-member LLC owners continue to use the EIN to ensure privacy, look more professional, and ease the banking and compliance process.

Practically, banks, payment processors and vendors frequently demand an EIN irrespective of how strictly the IRS would demand it.

The Importance of obtaining an EIN

Your LLC will be able to work effectively and professionally with the help of EIN. One has to open a business bank account, apply to business credit, and submit some tax returns. In case you intend to employ people, you are required to have an EIN to conduct payroll taxes and file employment reports.

The separation of personal and business finances also assists in keeping your personal and business finances apart, which is essential in protecting your LLC in terms of limited liability.

When Do you need to apply to an EIN?

It is preferable to apply to an EIN once you have successfully established your LLC with the state but before you get down to substantial business. Preferably, you are supposed to have your EIN to open a business bank account, sign contracts, and hire employees.

You are free to apply to EIN any time after formation, but you should not procrastinate since you are only wasting time in running your business.

How to Get an EIN for Your LLC

Application of EIN is free and not very difficult. The IRS has a number of ways of application, but online application is the most popular and the speediest.

Internet Application (Quickest Process)

Businesses whose company location is in the United States or U.S. territories can use IRS online EIN application. It should not take more than 10 to 15 minutes and the EIN is issued to you as quickly as it is done.

You will be required to give details of the legal name of your LLC, the address, the date of its formation, the name and Social Security number of the responsible party (which in most cases is an owner or a manager).

Applying by Mail or Fax

You may also apply by filling IRS Form SS-4 and sending it through mail or faxing. Processing of mail applications usually takes a few weeks and fax applications can be done sooner, depending on IRS workload.

Businesses that are unable to utilize online or like paper work tend to use this method.

International Applicants

In case the party that should do it lacks a Social Security number or ITIN, the LLC cannot submit the application online. Rather, foreign applicants have to apply either by phone or filing Form SS-4 by mail or fax. IRS offers special treatment of such cases.

The data You will require to do

You will be required to have proper and full information to apply to obtain an EIN. This will consist of the legal name of your LLC as it is registered with the state, the address of your business and the date of formation of the LLC.

The party in charge, who owns or is in charge of the LLC, will also have to be identified. The application will require the name and SSN or ITIN of this person.

Giving wrong information may slow down the process or cause problems in the future hence one should confirm all details.

What To Do Once You have been issued with an EIN

Your EIN is permanent and when issued it belongs to your LLC. The confirmation notice should be kept securely since it may be required by the banks and other institutions.

Once you are issued with your EIN you may use it to open a business bank account, apply licenses and permits, establish payroll systems and file necessary tax returns. Sometimes you might be required to update the IRS with the change in organization or tax classification of your LLC, however, the EIN is often the same.

Common Mistakes to Avoid

Unnecessary application of multiple EINs is one of the pitfalls. Most LLCs need only one EIN. The application of extra EINs with an invalid reason may cause problems of confusion and compliance.

The other misuse is improper use of EIN like personal and business use. EIN is not to be used except on official business.

Not maintaining EIN records as well could lead to time wastage when handling banks, tax authorities or suppliers.

Final Thoughts

Registering an LLC EIN is not a difficult but crucial step in creating an admissible and professional company. An EIN covers all the banking and employment aspects as well as tax reporting and coverage of liability as mandated by the law or adopted out of convenience.

When you apply at the opportune time and enter in the correct EIN, you establish a solid base in which your LLC will be operating in terms of finances and legalization.

Frequently Asked Questions