You may wonder, “Do I need an EIN for my LLC?” A single-member LLC can either use the Social Security Number (SSN) of the single member to conduct business, or it can obtain a separate Employer Identification Number (EIN). An EIN is required for a multi-member LLC, or if you anticipate having employees. The EIN will be the identifying number for your business, much like the Social Security Number is for an individual. Show
What Is an EIN?An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is the primary identification number for a business entity. An EIN is not the same number as the Filing Number that the Delaware Secretary of State issues to each new entity. An EIN must be applied for separately from the Delaware filings and directly with the IRS. Do I Need an EIN?A company is required to obtain an EIN from the IRS when they hire employees and when they need to file certain tax returns. An EIN is required to open a business bank account at many banks. Even in instances when an EIN is not required by the IRS, an owner of a business may want to obtain one so they do not need to use their SSN for the business. Can an LLC Use a Social Security Number?A single-member LLC, in most instances, is permitted to use the member’s SSN for the business. However, this is not recommended. An LLC should obtain an EIN regardless of membership or tax status so as to ensure there is not liability of the business that is imputed to the owner via “alter-ego” liability theory. What Is an EIN For?The EIN is typically used on tax filings, bank account applications and other purposes when a third party needs to identify an entity doing business locally or across state lines. Does an LLC Need an EIN?The IRS says that an LLC must have an EIN if it employs people or if it is required to file certain excise tax forms. Even single-member LLCs classified as disregarded entities will need to obtain an EIN if they fall into this category. If a single-member LLC does not have employees and does not have excise tax liability, it does not need to obtain an EIN. However, even those LLCs should obtain an EIN instead of using the member’s SSN to maintain the separateness between the LLC and its owner. Does a Corporation Need an EIN?Any corporation with more than one shareholder is required to have an EIN. A corporation that has one owner may use that person’s SSN, however it is recommended that the corporation obtain an EIN to maintain the separateness between the corporation and its owner. Does a Single Member LLC Need an EIN?The rule above also applies to members of LLCs. A single member LLC may use the member’s SSN, however they should obtain an EIN for the business. How do I get an EIN?You can get it through the IRS directly or IncNow can help. Just select the EIN add-on when you place your order for a new entity formation with IncNow, or order the service on our website separately. When Should I Get an EIN?We recommend that you obtain an EIN number soon after the formation of your LLC whether you are forming a single-member or multi-member LLC. IncNow can assist with obtaining the EIN for United States residents and non-residents alike. You may order our EIN service at the time you place your initial LLC formation order or you may come back at a later time. To order this service, visit our EIN order page. Does an EIN Expire?An EIN, like a social security number, does not expire. Once the IRS issues an EIN to your company, it will always be associated with your corporation or LLC. An employer identification number, or EIN, is a nine-digit number similar to a Social Security number. It is assigned to a business entity by the IRS. Business entities that are required to file various tax returns use their EIN the same way an individual uses his or her Social Security number. The IRS uses the EIN like an account number to keep track of tax returns. If your business is a single-member limited liability company (LLC) and is required to file a separate tax return, then you will need an EIN. IRS Entity ClassificationThe IRS allows LLCs to choose how they will be classified for tax purposes. LLCs with two or more owners can choose to be treated as a partnership or corporation for tax purposes. Single-member LLCs can choose to be treated either as a corporation or a "disregarded entity." A disregarded entity is treated like a sole proprietorship by the IRS. Owners of single-member LLCs who wish to be treated as corporations for tax purposes must file either IRS Form 8832 and elect to be treated as a C corporation or IRS Form 2553 to elect classification as an S corporation. If you do not file Form 8832 or 2553 to elect to be treated as a corporation, the IRS will treat your LLC as a disregarded entity and you will be taxed as a sole proprietorship. Note this discussion applies only to single-member LLCs owned by individuals, not other companies. Sole Proprietorship Tax TreatmentBy default, the IRS treats single-member LLCs as sole proprietorships. (That is, if you don't make an election, your single-member LLC will be treated as a sole proprietorship.) As a sole proprietorship doing business through an LLC, you do not need a separate EIN number unless you have employees or are required to file excise tax returns. By default, owners of single-member LLCs report the business profits and losses from the LLC on their personal tax returns using their own Social Security number or tax identification number. Owners of single-member LLCs are not required to have separate EINs because they are not considered employees of the LLC by the IRS. However, if your single-member LLC has other employees you are required to obtain an EIN and file employment taxes. Corporate Tax TreatmentCorporations are treated as separate entities apart from their owners for tax purposes. As separate entities, the IRS needs a way to keep track of corporations and their various tax returns. The EIN is the mechanism by which the IRS tracks the business activities of corporations. Regardless of whether you are an employee of your single-member LLC, if you have elected to be treated as either an S or C corporation, you will need to obtain an EIN. Other ConsiderationsOutside of federal tax considerations, there are other reasons why you may need to obtain an EIN. First, most banks will require you to obtain an EIN if you wish to open a business account in the name of the LLC. Second, many companies with which you do business may require you to have an EIN in order to process payments. Finally, some states may require LLCs to report income on state tax returns using an EIN. It is important to consider these factors as well as the IRS requirements when determining whether you need an EIN for your single-member LLC. |
Do i need a tin for my llc
Related Posts
Copyright © 2024 en.apacode Inc.
