Multi-member Limited Liability Companies (LLCs), which are businesses owned by two or more individuals, must obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) for tax administration and other business-related activities.
How to Apply for an EIN
To apply for an EIN, multi-member LLCs can:
- Apply online for free through the IRS website. The EIN will be provided immediately.
- Download Form SS-4, also known as the Application for Employer Identification Number, fill it out, and fax it to the IRS. The IRS will process the application and send the EIN within four business days.
- Mail or fax the completed Form SS-4 to the IRS.
- Call the IRS to apply, though this option is not available for international applicants.
Disregarded Entities
The IRS considers single-member LLCs that do not elect corporate tax status as disregarded entities. These LLCs do not need an EIN if they have no employees or excise tax liability and can use the owner’s Social Security Number (SSN) or individual tax ID number for tax purposes.
Importance of an Operating Agreement
Multi-member LLCs must have an operating agreement that outlines the company’s management structure, voting rules, distribution of profits and losses, and other governance issues. This agreement ensures all members understand and agree to the company’s operational procedures. Additionally, one of the primary advantages of a multi-member LLC is the limited personal liability afforded to its members.