An Employer Identification Number (EIN)— also known as a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number — is a nine-digit number assigned by the IRS to your business.
Much like a Social Security Number, the IRS uses an EIN to identify a business, and it must be included on your business tax filings.
Whether your LLC is required to have an EIN depends on several factors, including the number of owners and whether you have employees.
Let’s look at factors that trigger a need to obtain an EIN for your LLC.
What are the EIN requirements for a single-member LLC?
If you operate as a single-member LLC(where you are the sole owner with no partners or co-owners), you are not required to have an EIN unless you have employees or file excise tax returns.
Still, you may need to obtain an EINto open a business bank account in the name of your LLC. Furthermore, some companies will require you to have an EIN before they can process payments to your business.
What are the requirements for a multi-member LLC?
A multi-member LLC with more than one owner or membermust have an EIN, regardless of how the LLC is taxed (as a partnership or corporation).
What are the benefits of having an EIN?
Even if your business is not required to have an EIN, there are good reasons to obtain one. An EIN can provide the following benefits for your LLC:
- Keeping your personal and business finances separate – To ensure limited personal liability, LLCs are required to keep their personal and business assets separate. Using an EIN rather than a Social Security Number on business filings and documents helps evidence that you are keeping personal and business dealings distinct from each other.
- Opening a business bank account – Most banks require your business to have an EIN to open a business bank account.
- Discourages personal identity theft – By providing your EIN to clients and vendors, instead of your Social Security Number, you can help to protect your personal identity from theft.
- Helps establish business credit – An EIN allows you to build a credit history for your business independent of your personal credit score. This can support a business loan or credit application.
- Adds credibility – Using an EIN instead of your Social Security Number is like a stamp of legitimacy for your business and helps build credibility with vendors.
What information is required for an EIN?
When applying for an EIN, you must provide certain information including:
- The legal name of the individual or entity for which the EIN is being requested, its address, and trade name (your “doing business as” DBA name, if you have one)
- Responsible party’s name and tax ID (generally a person with authority to control, direct, or manage your business and disposition of its assets and funds)
- Type of entity (e.g., corporation, LLC, sole proprietor) and date your business was started or acquired
- Reason for applying (e.g., starting a new business, hiring employees, acquiring an ongoing business, changing the type of entity)
- The highest number of employees you expect in the next 12 months, whether you’ll pay employment taxes annually (if you qualify) or quarterly, and the first date wages were paid
- The number of LLC members
You’ll also need to identify the business type that best describes your industry from the list below:
- Accommodation & food service
- Construction
- Manufacturing
- Finance & Insurance
- Healthcare & social assistance
- Retail
- Real estate
- Rental & leasing
- Transportation & warehousing
- Wholesale-agent/broker or Wholesale-other
- Other
How do you get an EIN for an LLC?
An EIN isn’t automatically generated when you form your LLC. Once your LLC is approved and filed, the state will issue a certificate or other confirmation document. This certificate serves as legal proof of your LLC’s status and can be used to obtain an EIN with the Internal Revenue Service (IRS). You can apply for an EIN online, by fax, or by mail.
If your business is a foreign LLC (meaning you do business in a state other than the state where your LLC was formed), you can apply via phone, fax, or mail.
Whichever method you use, the IRS will only issue one EIN per day, per responsible party.
Can I reuse the Federal Tax ID (EIN) Number from my sole proprietorship?
If you operate your business as a sole proprietorship or general partnership, your Social Security Number is typically used as the Federal Tax ID Number for your business. When you incorporate or form an LLC, you must obtain a new EIN for your business.
When do I need more than one EIN?
Most small businesses only require a single EIN to operate. However, your business may need a second or multiple EINs if you plan to open another business or develop subsidiaries of your LLC.
Another scenario is if you do business outside your formation state. “Doing business” means carrying out normal activities of your business in another state on a regular basis or with substantial contacts – not just an occasional shipment. (Read more about What constitutes doing business in a state?). For each state in which your LLC will be doing business, you must apply to the state’s department of revenue for a sales tax identification number and register with the state’s labor department.
Learn more
Learn more about creating an LLC in a few simple steps and get trusted guidance to make sure the process is done right.
Resources
Obtaining a federal tax ID (EIN)
