Do I Need An EIN For My LLC?
Starting a new business can bring a lot of excitement into your life, however, it is a lot of work, and there are many requirements you need to meet. For example, when you set up a Limited Liability Company (LLC), one of the first things you need to do is obtain an Employee Identification Number (EIN).
However, there is more than one type of LLC, and there are various requirements you need to meet to obtain your EIN. Below is all you need to know to answer the question “do I need an EIN for my LLC?”, and what you need to put together to prepare for one.
What is an EIN?
An Employer Identification Number (EIN) is a nine-digit number provided to a company by the Internal Revenue Service (IRS). It is used for taxes in the US and is sometimes also known as a Federal Tax Identification Number (TIN).
The purpose of an EIN is to assist the IRS in tracking a company’s payments and tax reports. Most forms of businesses will need one, such as corporations, partnerships, LLCs, sole proprietorships, estates, and non-profit organizations. A bank may also use an EIN to help verify a company’s identity, and the government may ask for it when asking for a permit or license.
EIN requirements for a single-member LLC
A single-member LLC (Limited Liability Company) is a business run by a single person or entity.
There are various EIN requirements for one of these LLCs, and sometimes it may vary depending on the state your company is based in. However, the most common requirements you may have to consider include:
- Formation documents: You need to establish the formation of your company through Articles of Organization from the area you wish to operate your LLC. The documents will usually include the name of your LLC, the operating address, and information about the registered agent.
- Operating agreement: This isn’t always required, but you might be asked to provide an operating agreement for your LLC. It should state the management structure of your company, as well as your responsibilities within the business.
- Business license and permits: Most of the time, you will need a business license or permit to operate your LLC. When applying for a business license, they will request your EIN. You will obtain your EIN from the IRS and provide it to your local government when applying for a business license.
- State taxes: This requirement will depend on the state your LLC operates in, so you should check your local tax laws. You might have to pay state taxes, so you should provide this information.
- Federal taxes: No matter the state you operate in, your LLC will need to file an annual tax return with the IRS as part of your EIN. Even if you don’t owe any federal taxes, you will still need to do this.
- Compliance with state laws: To gain an EIN, you must ensure you comply with all the state laws where your LLC operates. This could be anything, such as filing your annual tax forms with the state and maintaining the right business records.
EIN requirements for a multi-member LLC
A multi-member LLC is a business owned by two or more individuals or entities. The EIN requirements for these types of LLCs are the same as a single-member LLC, but there are a couple of extra things you need to consider:
- Contributions and distributions: Since this type of LLC has multiple members, each contributes to the business through its profits and losses. You need to establish each member’s contributions and how you will distribute them throughout the company.
- Decision-making: You need to have a clear-cut decision-making process as a multi-member LLC to show how you will make choices regarding your business. This can include things such as how you will approve major expenditures and voting for board members.
Can you run an LLC without an EIN?
You need an EIN to run an LLC if it is a multi-member LLC or a single-member LLC with any employees.
If you have a single-member LLC with no employees, you might still have to have an EIN if you disregard the company for tax purposes. There may also be some state requirements for an EIN, so look up your local government laws to see if you need one.
You should get an EIN as soon as your LLC forms to ensure you stay compliant with federal and state tax laws.
Is an EIN the same as an LLC?
No, an EIN is not the same as an LLC.
An LLC is a business built under the laws of the state it operates in and provides liability protection for all members. On the other hand, an EIN is a nine-digit number provided to an LLC or other form of business by the IRS for tax purposes.
When do I need more than one EIN?
Most of the time, you’ll only need one EIN, especially if you’re running a small business. However, there are cases where you’ll require a second, or even more, EINs if you open another company or introduce subsidiaries into your LLC.
How do I get an EIN for my LLC?
You won’t automatically receive an EIN for your LLC. Instead, you need to issue a confirmation document after you get approved. It will verify your LLC’s state and be used to get your EIN from the IRS. You should send off this certificate via mail or by applying online. If you have a foreign LLC (one that is outside the US), then you will need to apply via phone or mail.