All business entities registered in the US need employer identification numbers (EINs). It is a unique number assigned by the Internal Revenue Service (IRS) to each tax-registered entity.
Applying for an EIN is free and you can get it instantly if done correctly. As a limited liability company, you’ll also need an EIN for tax filing and other transactions.
What is an Employer Identification Number (EIN)?
An employer identification number (EIN) is a unique nine-digit number issued by the Internal Revenue Service (IRS) to business entities.
It is also called the Federal Tax Identification number of businesses. As the name suggests, it is used by the IRS for tax identification of different business entities.
It serves the same purposes for a business as the Social Security Number (SSN) does for individuals. Unless you operate an exempt organization, you’ll need an EIN from the IRS.
An employer identification number is issued only once to each business entity. Even when you do not file taxes, your EIN will not change or cancel from the IRS records.
Do You Need an EIN for an LLC?
A limited liability company or LLC can have a single or more member. Single-member LLCs are called sole proprietorships and they do not require an EIN.
Since the owner of a single-member LLC assumes the liability of the business, the entity can do business without an EIN. For tax filing, the owner of a single-member LLC can use personal tax identification or social security number (SSN).
For all other business entities, an employer identification number is a must. Only tax-exempt entities do not need an employer identification number.
The Internal Revenue Service (IRS) issues an EIN to the following business entities:
- Limited liability companies (LLCs)
- Partnerships
- S Corporations
- Sole Proprietorships
- Not-for-Profit Entities
- Government Entities
- Trusts and Estates
Since a tax filing business will require an EIN at different stages, it’s important to obtain one at the time of registration.
You’ll need an EIN when incorporating a business, registering a partnership, hiring employees, filing employee taxes, excise taxes, and when withholding income taxes.
Similarly, if your business is involved in activities with trusts, estates, farmer’s associations, and not-for-profit entities, you’ll need an EIN.
What are the Requirements for an EIN?
If your business fulfills any of the conditions mentioned above, you’ll need an employer identification number (EIN).
Here are a few requirements to apply for an EIN with the IRS:
- Name of the company owner, partner, trustor, or principal officer.
- The type of business entity
- The principal industry of the business
- The registration/start, or acquisition date of the business
- The reason for applying EIN; new registration, change of entity structure, IRS compliance, etc.
- An individual responsible for business with a valid TIN or SSN.
The service is free of cost from the IRS. So, it costs you nothing to apply and get an employer identification number.
All you need is to fulfill form SS-4 and apply for the EIN. Form SS-4 is available on the IRS website and is free to download. Applicants can fulfill this form online too.
How to Apply for an EIN?
There are four options for businesses to apply for an employer identification number.
Apply Online
The easiest and quickest method to apply for EIN is through the IRS website. You can fulfill Form SS-4 online in minutes.
You only have 15 minutes to complete the application in a single session. Therefore, keep the information available to you as listed above.
The online EIN application process is available to all businesses registered within the US states and territories.
Once you complete an online application, the employer identification number (EIN) is issued instantly.
By Mail
If the online application process is too fast or inconvenient for you, you can download Form SS4 and send it to the IRS by mail.
Make sure to complete all sections of Form SS4 and that the information provided is correct. This method is the slowest one as it takes around four weeks to issue an EIN by the IRS receiving application by mail.
By Fax
A similar method available to you is to apply for EIN by fax. You can download Form SS4 and complete it manually before sending it to the IRS.
You’ll receive an EIN through fax from the IRS within four business days if the application contains all information required.
You can send Form SS4 by fax at:
- 855-215-1627 (within the U.S.)
- 304-707-9471 (outside the U.S.)
By Telephone
International businesses conducting business in the US can apply for an EIN by phone as well. The person applying for an EIN must be an authorized person for the applicant’s business entity.
You can call IRS at 267-941-1099 and provide the necessary information to complete the application.
How to Get an EIN?
Once you register a business entity in the US, you’ll need an employer identification number. You can follow these simple steps to get an EIN easily.
Step 01: Register an Entity Type
The first step is to register your business entity. In your case, it is a limited liability company (LLC). All other business entities may also apply for an EIN as listed above.
During this process, you can register as a single-member or a multi-member LLC as well.
Step 02: Determine the Responsible Party
Applying for an EIN requires establishing a “responsible party”. It is an authorized person to apply for the EIN and communicates with the IRS.
You’ll need the legal name and social security number (SSN) of the authorized person during the online application process.
Step 03: Understand the EIN Application
You can use one of the four methods listed above to apply for an EIN. The online session expires in 15 minutes and there is no option to save and return.
Therefore, it’s an important step to understand the online application process and avoid mistakes.
Step 04: Provide Details about the LLC
Once you’re ready, provide the key information to complete an EIN Form SS4 online. For convenience, you can download Form SS4 read it carefully, and then apply online for successful completion.
Step 05: Submit the Application and Receive the EIN Confirmation Letter
Depending on which method you chose, it may take up to four weeks to get an EIN. However, if you apply online, you’ll get an EIN instantly.
You’ll receive an employer identification number (EIN) confirmation letter online or by email as well.
What are the Benefits of Getting an EIN?
The first advantage of getting an EIN is fulfilling a regulatory requirement. A business cannot operate in the US without an EIN unless it is an exempted organization.
Even when you do not file tax returns, you’ll need an employer identification number. Single-member LLCs may not need an EIN for tax filing purposes but will get other benefits.
Here are a few key benefits of getting an EIN:
- It completes business registration requirements.
- It is unique and does not expire.
- You’ll need it for obtaining facilities like a bank loan, opening a new bank account, or investment accounts.
- You’ll use it for hiring new employees and paying salaries to all employees.
- Registering and filing state and federal business taxes.
How to Cancel an EIN?
Technically, the IRS cannot cancel an EIN once it is assigned to an LLC or any other business entity. It is a unique number and is assigned only once to a business entity.
However, if you do not need an EIN anymore or close your business, you can send an application to the IRS to close your tax account.
Although the IRS cannot delete the EIN, it will permanently close the business account associated with your LLC.
Tax Identification Number (TIN) Vs Employer Identification Number (EIN)
The tax identification number is a generic term used by the IRS to assign different types of tax identities.
It can be associated with individuals or businesses. For instance, individual TINs are also called social security numbers (SSNs).
Therefore, an employer identification number (EIN) is a type of TIN.
