How to Get EIN for LLC 2023: Free Guide
If you’ve ever started a new business, you know that it’s a process. You don’t just wake up one day and decide that you’d like to form an LLC. It takes time, research and know-how to choose the type of business you want to create and to legally incorporate or form a legitimate business.
There are several crucial steps to forming a business, and in the US one of these steps is obtaining an employer identification number. Since a business you create is a separate entity, it needs separate identification from yours. Even if you’ve bought another business, the business sell process should include an application for a new EIN. US citizens are given a social security number, and businesses are given EINS when applying for it.
Read More: Best Registered Agent Services 2023
Why Does an LLC Need an EIN?
In order to conduct business in the US, you’ll definitely need an EIN. To open a business bank account, hire employees, file taxes, secure loans, and get business licenses, you’ll need an EIN. It should be one of the first steps you take when forming a business.
What Is EIN (Employer Identification Number)?
An EIN is just like a social security number, it’s a federal employer identification number that makes your business legitimate before the internal revenue service. The EIN also serves as a federal tax ID number and enables your business to identify itself for tax purposes.
IRS (Internal Revenue Service) Request for EIN
The IRS has an easy-to-navigate EIN application system on its website, or you can mail in the IRS form. You can apply online here and select what type of business you need an EIN for. In order to get an EIN, you, as the business owner, have to have a taxpayer identification number like a social security number.
One important thing to note here is that you have to already have your business entity formed or incorporated before you apply for your federal tax ID number.
To complete this application process correctly, make sure you have your taxpayer identification, business name, mailing address, and your corporation or LLC start date handy.
Benefits of EIN for LLC
As we mentioned before, there are so many benefits to getting an EIN for your LLC or corporation. You truly can’t do business as a legitimate entity without a nine-digit number assigned to you as an EIN.
Read More: Best LLC Services 2023
Open a Business Bank Account
First of all, with an EIN you can open a bank account for your business. You might not think you need a separate LLC bank account, but it can be so helpful if you need to keep your business assets separate from your personal assets.
At the end of the year when filing your federal tax return, you’ll need to know your business income. This bank account can help you identify your exact income easily.
Apply for Business Loans
When you start a new business entity, funding is of utmost importance. Having a business credit card might not be enough to get you off the ground running, and you might need to get a small business loan.
Your LLC’s EIN will be necessary to secure any funding for your new company. Even though these loans and business liabilities may seem a little far off and daunting, they might be necessary for even a single-member LLC.
Hire Employees & Withhold Taxes
If you’re seeking to start a company with multiple members and hiring employees is on your list of to-dos, an EIN will be very necessary. Having one or more employees will require you to withhold taxes for them, and possibly start to pay for worker’s compensation insurance.
You must have an employer identification number (EIN) in order to secure these services and legally hire any personnel.
To practice proper tax treatment locally and for federal tax purposes, you’ll need an identification number. Make sure you get a business tax ID before you hire anyone or pay them first-date wages.
Getting EIN for LLC in 5 Steps 2023
There are a few crucial steps to obtaining an EIN for an LLC or corporation, and we’ve outlined them all below.
Option of Applying for EIN
First, you can apply for your EIN online or by mailing an application to the IRS. Follow the IRS instructions to get an EIN for your existing business. To apply for an EIN, you must enter your company information correctly and be sure to have a taxpayer identification number.
It’s important to note that if you apply online, you’ll receive your EIN online, and if you mail in your application it will take longer to be sent to you through the mail.
Your EIN operation will be slower through the mail, and faster online. However, it’s a free form either way.
Choose Your Legal Structure
During the application process, you’ll need to choose what type of business you’ve formed. To get an EIN, you must have already formed your business (you can choose an S corporation, an LLC, a sole proprietorship, or another business structure).
You’ll also decide if you want a single-member sole proprietor, an S corp with multiple owners, or something different. Choose the members and structure carefully, but know you can always change the structure in the future.
Verify the Responsible Party
Within the application, you’ll need to identify who is the responsible party for the LLC or corporation. This individual must possess an identification number such as a social security number.
The responsible party may be yourself or other LLC members in the case of a multi-member LLC. For a single-member LLC, it must be the sole managing member. Include this person’s name, physical street address, and their identifying taxpayer number.
Provide Your LLC Information
You must then indicate your LLC company name. This name must be already approved by the state you do business in, and for a single-member LLC or a multi-member LLC, it typically must include words indicating that it is indeed a limited liability company. This information will enable you to get an identification number for your LLC.
Get Your EIN Confirmation
After you’ve entered all this crucial information, you’ll either be rejected if you don’t have the correct information, or you’ll be granted a nine-digit number to serve as an identification number (EIN) for your business.
You’ll receive an EIN confirmation letter in a few business days if you apply for an EIN by mail, but if you apply online you’ll get an EIN confirmation notice on the page you apply.
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Zenbusiness is another top contender in the LLC formation world because of the plethora of features they offer. They have a service package for every price range, and their interface has become known for being super easy to use.
It’s super easy to get a business tax ID with ZenBusiness; they make it a simple and automated process that anyone can accomplish.
Whether you have a sole proprietorship, an LLC, or a corporation, it’s easy to get yourself an EIN. They are crucial for basic business functions such as securing a loan, hiring an employee and filing annual taxes.
Make sure to keep your EIN in a secure place (just like you would your social security card) to protect yourself against identity theft.
Frequently Asked Questions (FAQs)
Yes, to file excise tax reports, you will need to have an EIN for your business handy.
Yes, you can fax your EIN application to 855-641-6935.
In order to get a valid EIN, the applicant must have a US-distributed identification number such as a taxpayer ID or social security number.
It can be helpful to have a separate credit card for your business since you can then keep better track of your business expenses for year-end reports. We’d highly recommend opening a business credit card for your LLC.
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Online EIN Frequently Asked Questions | Internal Revenue Service. Irs.gov. Published 2019. Accessed January 14, 2023. https://www.irs.gov/businesses/small-businesses-self-employed/online-ein-frequently-asked-questions
How to Apply for an EIN | Internal Revenue Service. Irs.gov. Published 2012. Accessed January 14, 2023. https://www.irs.gov/businesses/small-businesses-self-employed/how-to-apply-for-an-ein
EMPLOYER IDENTIFICATION NUMBER. Irs.gov. Accessed January 14, 2023. https://www.irs.gov/pub/irs-pdf/p1635.pdf
IRS. Apply for an Employer Identification Number (EIN) Online | Internal Revenue Service. Irs.gov. Published 2014. Accessed January 14, 2023. https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
IRS. S Corporations | Internal Revenue Service. Irs.gov. Published 2018. Accessed January 14, 2023. https://www.irs.gov/businesses/small-businesses-self-employed/s-corporations