The Internal Revenue Service uses an employer identification number (EIN) to identify business entities. While most limited liability companies (LLCs) will need an EIN, there are some exceptions. Multimember LLCs are required to use an EIN to file taxes, but sole proprietors and single-member LLCs can use their Social Security numbers instead.
When to Get an EIN
An LLC must register with the state before it can get an EIN. The IRS requires all LLCs that hire employees to get an EIN. Additionally, LLCs that pay certain excise taxes must get an EIN. For single-member LLCs without employees, an EIN may not be required unless they have excise tax liability. However, banks may require an EIN to open accounts or apply for loans.
An LLC applies for an EIN by filing Form SS-4, Application for Employer Identification Number. If moving from sole proprietor to LLC, it is necessary to obtain a new EIN.
Benefits of Having an EIN
Getting an EIN provides benefits even if not required. The benefits include privacy, identity protection, and the ability to open business bank accounts.
Should every LLC have an EIN?
Employer Identification Number (EIN) is a unique identifier for businesses with employees or specific tax obligations. It stands for Employer Identification Number and is assigned by the Internal Revenue Service (IRS).
In December 2017, updates regarding the issuance of EINs to Limited Liability Companies (LLC) were introduced by the IRS.
Is it possible to open a business bank account without an EIN? Sometimes, but rarely. Single-member LLCs and sole proprietorships are not strictly required to have an EIN as they are taxed as individuals. However, an EIN may be required to open a business bank account.
To obtain an EIN for your LLC, you can apply easily through the IRS website, by mail, or fax using Form SS-4.