Starting an LLC allows you the opportunity to develop your sole proprietorship or partnership into something bigger. It can help you embark on a totally new adventure — but it also takes some extra work. To start, you’ll want to make sure you’re handling all the paperwork and covering all legalities the right way. One of the first things you’ll need to consider is an EIN.
Do you need an EIN for an LLC? How do you get an EIN? Is it possible to move an existing EIN?
It’s normal to have these types of questions. Here, we offer some easy answers. Find out all you need to know about EINs and whether you’ll need one for your LLC.
What is an EIN?
An EIN (employer identification number) is what the IRS will use to identify your business. Think of it like a social security number (SSN), but for your company, not an individual.
Made up of nine digits an EIN follows the format: XX-XXXXXXX.
Unlike an SSN, everyone can see your EIN as it will be public information and can be viewed as such.
You can request an EIN from the IRS for free. The nine-digit number is used when you pay employees or contractors and file your taxes.
Can You Have an LLC Without an EIN?
Yes, in some circumstances you can have an LLC without an EIN. All multi-member LLCs require an EIN, but if you have a single-member LLC, you don’t always need an EIN. The IRS categorizes single-member LLCs as “disregarded entities,” meaning the income of the LLC is considered the owner’s income when it comes to federal tax.
An EIN is only required for a single-member LLC if you do one or more of the following:
- Pay excise tax
- Have at least one employee
- Choose to be taxed as a corporation
Keep in mind that if you have a multi-member LLC, you can’t legally create and operate that LLC without getting an EIN for it. That’s also true if you have a single-member LLC originally, but decide to add a member to it. As soon as it becomes a multi-member LLC, you need to obtain an EIN.
Should I Get an EIN for My LLC?
Whether you get an EIN for your LLC is really an individual choice. However, there are benefits to having this identification number even if it’s not legally required. The use of an EIN clearly classifies your LLC as a separate entity from you as the owner.
For example, most banks require an LLC to have an EIN before a business can open a banking account. Unless you want to run everything through your personal checking account, getting an EIN may be a better choice.
You may also find that it’s easier to work with vendors, contractors, and other business services when you have an EIN. You’re taken more seriously and your company is seen as a strong business endeavor, not just a hobby.
Does a Single-Member LLC Need an EIN?
Technically, no, a single-member LLC doesn’t need an EIN. A single-member LLC can operate under the social security number of the owner.
But a lot of single-member LLCs still choose to have an EIN because it makes it easier to separate personal and business finances. You may also find that you need the EIN to open a business bank account for your LLC.
Does a Multi-Member LLC Need an EIN?
Yes. Every multi-member LLC is required to have an EIN to operate. If you don’t have one you will be in violation of IRS rules and may not be able to file taxes or handle other tax-related issues.
When is a New EIN Required?
When you have an EIN for your sole proprietorship but you decide to turn that company into an LLC.
With a change in the type of company you’re operating, you won’t be able to simply pass along your current number. Instead, you’ll have to get a new EIN.
You would want to consider a new EIN if you’re planning to change the ownership or the structure of the business entity. However, you will not need a new EIN if you are simply changing the name of your business or relocating.
How To Get an EIN for an LLC
The fastest and easiest way to obtain an EIN is online. You must be based in the U.S. or a U.S. territory, and you’ll need to apply during EIN business hours. Available hours are 7 am to 10 pm EST, Monday through Friday.
You’ll need to make sure your LLC is registered and approved before applying, so you can provide the IRS with all the information it needs to issue your LLC an EIN. A valid SSN or other taxpayer ID number is also required.
You will have to fill out the form completely in one sitting since it won’t save your session. Keep in mind that the site will time out after 15 minutes of inactivity. Once the form is filled out, you’ll be able to get your EIN immediately.
If you prefer not to apply for an EIN online, you can download and fill out this form and mail or fax it to the IRS. This process will take you longer as you’ll have to wait to receive your EIN in the mail.
How Much Does It Cost to Apply for an EIN?
An EIN is a free service offered to businesses by the IRS. It does not cost any money to apply for an EIN for your business.
Can a business name include special characters?
You can’t use special characters in business names on the IRS website. Instead, the IRS offers a few suggestions that you can consider. These include:
- Spelling out the symbol
- Dropping the symbol and leaving a space
- Substituting a hyphen for a backslash or forward slash
- Dropping an apostrophe and not leaving a space
If you have special characters in your business name, the choice of how you list that name is ultimately up to you. Just make sure you list it in a way that works for you and avoids any potential confusion in the future.
More Frequently Asked Questions about EIN
How Quickly Will I Receive My EIN?
If you fill out the form online you can get your EIN immediately. If you mail or fax your form, expect to receive your EIN within a few days to a couple of weeks. This includes time for processing and mailing the EIN to your address.
Can I Get My EIN Before My LLC?
No, you must have a registered and approved LLC before you can get your EIN. If you apply for the EIN before your LLC has been approved, you won’t be able to completely fill out the form you need to receive your number from the IRS. This will ultimately slow down your process.
When Can I Begin Using My EIN?
As soon as your EIN is issued it’s available for you to use, whether you get it immediately online or through the mail.
Can You Get an EIN Without an LLC?
Yes, you can get an EIN without an LLC. Most sole proprietors just use their SSN, but that doesn’t mean you have to as well. There are some benefits to getting an EIN. If you have a sole proprietorship, you may want to consider getting an EIN for:
- Tax purposes
- To reduce your identity theft risk
- To help separate your business and personal tax affairs, you can legally request an EIN
Can I Change My EIN From Sole Proprietorship to LLC?
No you can’t change your EIN from a sole proprietorship to an LLC.
If you change your business status from a sole proprietorship to an LLC you must request a new EIN for that LLC. Your old EIN won’t work with a new business entity.
