Does an LLC Need an EIN?

By William Pirraglia

LLCs, or limited liability companies, are a relatively new business structure. As state, not federal entities, their formation and maintenance can differ from state to state. However, LLC owners must still pay appropriate taxes to the federal government. Because the IRS does not recognize LLCs as separate taxable structures, LLC owners may need to get an EIN, or Employer Identification Number, from the IRS in some situations.

LLCs, or limited liability companies, are a relatively new business structure. As state, not federal entities, their formation and maintenance can differ from state to state. However, LLC owners must still pay appropriate taxes to the federal government. Because the IRS does not recognize LLCs as separate taxable structures, LLC owners may need to get an EIN, or Employer Identification Number, from the IRS in some situations.

Single-member LLCs

LLC owners are called "members." Single-member LLCs may or may not need an EIN. If your LLC is a home-based business and you act as owner, manager, director and maintenance department, you are not required to have an EIN. You can simply elect to be treated as a sole proprietorship for tax purposes and use your social security number as your LLC EIN.

Ready to start your LLC? Start an LLC Online Now

Single-member LLCs With Employees

Your LLC will need an EIN if you expand and hire employees. Until 2009, single-member LLCs could pay required payroll taxes using the owners' social security numbers as their EINs. However, since January 2009, single-member LLCs must have a EIN, like most other business structures, for payroll tax purposes.

Taxation Election

Since LLCs are not formally recognized by the IRS, they can choose how they wish to be taxed. LLCs can select to be taxed as corporations, partnerships or sole proprietorships, if there is only one member. LLCs choosing to be taxed as corporations or partnerships need an EIN. Even single-member LLCs, should they have employees or choose corporation tax treatment, also need an EIN.

Considerations

You may also need a new EIN if you change the ownership structure of your LLC. For example, if you have a single-member LLC that has been taxed as a sole proprietorship, but for operating or financial reasons you now elect to be taxed as a corporation, you have changed your tax structure and will need to file for a new EIN from the IRS. Should you sell your LLC, the new owners must also request a new EIN from the IRS.

Getting an EIN

You have four choices to get an EIN for your LLC. The most efficient way is to apply online. This method validates your information during your online session and issues an EIN immediately. You can also choose to file for your EIN by telephone, fax or mail. The telephone method will also enable you to receive your EIN immediately. If choosing to apply via fax or mail, complete form SS-4, which you can download from the IRS website. If you give the IRS your fax number when applying by fax, you should receive your EIN within four days via a return fax. The timing of a mailed response is more difficult to predict.

Ready to start your LLC? Start an LLC Online Now
Do LLC Companies Need an EIN Number?

References

Resources

Related articles

How do I Get an Illinois State ID Number for an LLC Company?

Illinois law governs the formation and acts of businesses registered in Illinois, including limited liability companies, or LLC’s. Forming an Illinois LLC requires filing a document, called the articles of organization, with the Illinois Secretary of State. Additionally, an Illinois LLC must obtain a certificate of registration and taxpayer identification number from the Illinois Department of Revenue. Obtaining an Illinois tax identification number requires filing an Illinois Business Registration Application with the Illinois Department of Revenue.

Is a Partner in an LLC an Employee?

From a legal perspective, there are no "partners" in an LLC, only owners, or "members." State laws differ, but in almost all jurisdictions, members, like partners in a standard partnership, cannot be W-2 employees. Most states specify that members will receive their proportionate share of LLC profits, as stated in the company's operating agreement. These profits -- or losses -- are treated as personal income on the appropriate partnership distribution forms.

What Is a Disregarded Entity LLC?

The type of business entity called a limited liability company, or LLC, is a creation of state law. Though LLCs have become commonplace, the IRS has not created a new category for these businesses, but has rather adapted existing tax categories for this new type of company. One of the primary benefits LLCs are intended to provide is the ability for business owners to report the company's profit or loss on their individual returns.

LLCs, Corporations, Patents, Attorney Help

Related articles

How to Convert a Sole Proprietorship to a Sub Chapter S

Many businesses start out as sole proprietorships because states have no formal filing requirements for this type of ...

How to Get a Tax ID for an LLC Company

It can be highly advantageous to organize your small business as a limited liability company, or LLC. An LLC is a ...

How to Complete an SS-4 for an LLC

An Employer Identification Number, or EIN, is a nine-digit identification number assigned by the IRS to business ...

How to Acquire a Registration Number for an Ohio LLC

Ohio business law regulates the formation and maintenance of businesses registered in Ohio. Registering an LLC in Ohio ...

Browse by category
Ready to Begin? GET STARTED