Should You File For An EIN Or LLC First?
If you’re planning on forming a limited liability company (LLC), then you may have been advised that you’ll need an EIN number for various purposes, including filing taxes with the IRS. An EIN (employer identification number) is a nine-digit number assigned to businesses by the IRS and can be incredibly important for an LLC.
But do you need an EIN number before you launch your LLC? Or should you set up your LLC first before you file for an EIN? We have all the answers for you below, as well as some additional information that will help you out.
What comes first: LLC or EIN?
While there is no ‘proper’ answer to this question, we can advise you on the best scenario. We recommend waiting until your LLC is formed before you obtain an EIN. This is because you want to ensure that the name you’re using for your LLC, which will be connected to your EIN, is not rejected and all information is correct. Similarly, you want to ensure the IRS has the exact date of formation when applying for your EIN.
How to obtain your EIN once your LLC is formed
Now you know that it is best for you to form an LLC before filing for an EIN, these are the steps you can take to obtain your EIN number:
- Choose how you’re applying: When you apply for an EIN through the IRS, you can do it by mail, fax, or online. If you apply by mail or fax, you’ll need to manually fill out Form SS-4 and then send it to the IRS office. It can take around 4 days to hear back via fax and a few weeks via mail.
- If you choose to apply online, head to the IRS website: When you open the website, you can find the EIN Assistant page, and the service is available Monday to Friday from 7:00 a.m. to 10:00 p.m. Eastern Time. Once you fill out the online form with all the correct information, you will receive your EIN immediately after submission.
- Use your EIN: When you receive your EIN number, you can then use it within your LLC for tax purposes, hiring employees, setting up a business bank account, and more.
Advantages of forming an LLC
Like most things in life, LLCs come with its upsides and downsides. Here are some of the main advantages of forming an LLC:
Protection from liability
Some business owners decide to set up an LLC because it protects them from liability.
Higher levels of professionalism
If you set up an LLC, your business name will be able to have ‘LLC’ or ‘Inc.’ attached to your name. This gives off a higher look of professionalism to clients and other businesses.
Taxes
As an LLC, you typically have an advantage when it comes to taxes compared to corporations. This is because a corporation has to pay double the taxes, as they pay on its earnings and the shareholders pay on their share of profits. If you’re an S-Corporation, you are exempt from paying corporate tax, and an LLC is allowed to choose to be an S-Corp for its taxes.
Ownership
An LLC is owned by members instead of shareholders, like a corporation. This means the amount of funds a member of an LLC can receive from the business is not dependent on how much they invest but rather on how well the LLC is doing.
Operations
If you choose to set up an LLC instead of a corporation, you tend to have a more flexible administrative process, which can reduce stress throughout the company. On the other hand, corporations require a board of directors and various management teams to work for the shareholders.
Need to look up your EIN? EINsearch has you covered
If you already have an LLC, but you’re not sure whether you have an EIN, or you lost the paperwork from your initial application, you don’t have to worry. There’s no need to apply for another EIN or try and get in touch with the IRS, as EINsearch is here to help you.
At EINsearch, we offer TIN Matching and have an EINsearch database of over 20 million verified EINs, making it easier for you to find your number. All you have to do is visit our website, register for an account, and you can start your search. Your EIN will be available to you within a matter of seconds.
Never lose your EIN number again, and have it readily available for all LLC purposes with EINsearch. For any other queries about EINs and LLCs, contact our team today, and we will be able to answer any of your questions.