If you’re currently forming a company, you might be facing these commonly asked questions: do I need my Limited Liability Company Employer Identification Number? What is an EIN number for business?
All LLCs operating in any given state are assigned names, addresses, managers, registered agent providers, and more. For this purpose, state authorities assign an EIN to make an entity’s identification easier.
Acquiring this number for your company means smoother operation as a whole as well as easier communication with the state and other businesses. This article will examine the nature of EIN, why it matters, and how to acquire one.
What Is an EIN number?
Employer Identification Number (EIN or Federal EIN) is a unique nine-digit code assigned by the IRS to identify a company in the state. Federal EIN (also sometimes called Federal Tax Identification Number) for LLC is publicly accessible, allowing the government to obtain information about any given LLC as well as its structure, owners, and tax reports.
What Is an Employer Identification Number Used For?
There are several reasons as to why your LLC might need an Employer Identification Number, so let’s take a closer look at some of them.
If you already have employees or plan to hire in the future, an EIN is required for the hiring process. The same goes for freelancers and independent contractors working on other LLC company projects.
Internal Revenue Service uses Employer Identification Number to determine the types of taxes an LLC should be paying. On top of that, the IRS employs EIN for excise tax returns on alcohol, tobacco, firearms, and ammunition.
EIN is a necessary requirement for opening a business bank account or establishing credit for your LLC. The number is also vital for separating your personal and cards from those of your business, preventing your business transactions from lowering your personal credit score. Many entrepreneurs choose to acquire an Employer Identification Number to establish a separate credit history for their company, allowing them to take loans in the future or sell the LLC. Keep in mind that business transactions with other companies also require you to have an EIN in order to receive payment for the services you provide.
EIN is mandatory if you want to acquire alcohol, tobacco, and firearm state licensing. Moreover, having an LLC Employer Identification Number allows you to use it in all documentation instead of your personal data (SSN, name, address).
Keogh retirement plan
Also called HR10, this tax-deferred plan for self-employed people and unincorporated entities allows you to set up retirement savings account with the ability to make larger deposits without paying additional taxes.
EIN is also necessary in cases when your business pays taxes out of the income of their non-residents unrelated to their wages (dividends, bonuses, just compensation).
Every LLC must acquire an EIN if they plan to work with nonprofit organizations, agricultural cooperatives, and other entities.
Sole LLC owners who work from home and don’t plan to hire any staff can use their SSN instead by simply filing all revenues and expenditures on their tax return.
Still, many owners choose to acquire an EIN number for LLC management purposes in order to avoid identity theft and protect personal data and funds.
How Do I Get an EIN?
Acquiring an EIN is fairly simple: the key is to prepare and file all required documentation correctly.
The easiest way to apply for an EIN is via the IRS website, though you will first need to register your LLC and have its name approved by the state.
The application requires the name and address of your LLC, time and place of its registrations, SSN of the organizer (owner or partner), number of owners and employees.
Applications to get EIN for LLC are processed from Monday to Friday from 7 a.m. to 10 p.m. Eastern Standard Time. Online applications should be completed in the span of a single 15-minute session and cannot be saved. If you fail to do so, you will have to wait for the next day to apply again. If your application passes the guidelines, and your SSN (ITIN) is valid, your EIN number LLC will be issued within three days since the submission.
It’s possible to submit the application with your state’s Internal Revenue Service via post or fax. This can be done by printing and filling out the SS-4 form. Its valid version can be found on the IRS website.
Though there are plenty of service providers that offer EIN acquisition for a set rate, the process is so simple and automated that you won’t really need professional services.
If you have somehow forgotten your Employer Identification Number, there are several ways to retrieve it:
- If your company is registered with the Securities and Exchange Commission EDGAR online Forms and Filings (SEC), it’s possible to find your EIN through their website.
- By calling the Business & Specialty Tax Line’s number (800-829-4933), you can retrieve your EIN by providing your SSN. Their representative may also ask you a few questions regarding your LLC to confirm your identity as the owner. They take calls from Monday to Friday from 7 a.m. to 7 p.m. EST.
- Your LLC Employer Identification Number can also be found on your tax return forms or the EIN verification letter you received from the IRS.
- If there is an accountant on your regular staff, they should be able to provide your EIN.
When Does a Business Need to Acquire a New Employer Identification Number?
Sometimes you won’t have a choice but acquire a new EIN for LLC. According to the IRS, an LLC company is required to get a new number in cases of internal restructuring or when it’s been inherited, sold, or filed for bankruptcy.
A new Employer Identification Number needed for LLC should be applied for with care. IRS guidelines allow you to apply online only once, so if your first EIN was acquired online, the new one will have to be applied for via mail or fax.
Where can I find my EIN verification letter?
If you misplaced your LLC EIN verification letter, also referred to as letter 147С, you can call the IRS hotline (1-800-829-4933) to receive a free copy. They take calls from 7 a.m. to 7 p.m. in your state’s respective timezone. An IRS representative will ask you a few questions to verify your identity (EIN, registered address, your name and title, the company’s name). After passing the authorization, you will be issued an LLC EIN copy via fax or post. The delivery takes between 10 and 14 days.
If you’re still unsure about getting an LLC Employer Identification Number number, consider this: acquiring one is bound to help you organize your documentation and handle it with more ease, especially if you plan to restructure your company, hire staff, or partner with charities.
With an EIN, you will only need to use this nine-digit number instead of exposing your personal information. Keep in mind that it might also help you avoid identity theft and protect your personal funds and credit score from those of your LLC business.