How to Get an EIN for an LLC and How Long It Takes

The type of business entity you choose matters. Companies decide to operate as an LLC when they want limited liability protection, management and tax flexibility, and perpetual existence. Although single-member LLCs can technically operate without an EIN, most LLCs need one. Additionally, having an EIN as an LLC provides the owners with several significant benefits.

What is an EIN?

An Employer Identification Number (EIN) is a unique nine-digit identifier assigned to your business. The Internal Revenue Service (IRS) assigns these numbers to companies in the United States when they register for tax purposes. It works similarly to a Social Security Number (SSN) for individuals. It is also known as a Federal Tax Identification Number (FTIN).

Why Do You Need an EIN?

Although single-member LLCs are not legally required to get an EIN, most LLCs are. You need an EIN for many reasons. The most crucial purpose of an EIN is to use for tax purposes when filing income tax returns.

• Federal Tax Reporting and Compliance

  EINs serve as a business equivalent of a Social Security number, enabling the IRS to identify businesses whenever they file taxes or other tax-related documents. EINs are especially critical for corporations, partnerships, and LLCs, all of which are required to have an EIN for federal income tax purposes, regardless of whether or not they have employees. It is used on various IRS forms, such as Form 941 (Employer's Quarterly Federal Tax Return) and Form W-2 (Wage and Tax Statement).

• Employees

  If a business has employees, an EIN is necessary for managing payroll and withholding and remitting employment taxes (including federal income tax, Social Security, and Medicare contributions).

• Certain Industries

  Businesses involved in certain activities requiring the filing of excise taxes (like those related to alcohol, tobacco, or firearms) also need an EIN.

• Financial and Administrative Tasks

  When you open a business bank account, most banks require an EIN to open a business bank account, which is crucial for separating business and personal finances. This can help you avoid issues if you ever get audited.

• Applying for Licenses and Permits

  Many states and local jurisdictions require an EIN for obtaining necessary business licenses and permits.

• Business Credit

  An EIN allows a business to establish its own credit history, separate from the owner's personal credit. This is crucial for obtaining loans, lines of credit, or collaborating with specific vendors.

• Working With Other Organizations

  Some organizations, such as nonprofits, may require an EIN from businesses they work with, particularly for grant applications or financial reporting.

• Retirement Plans

  Certain retirement plans, like Keogh plans, require an EIN for those who are self-employed or operating unincorporated businesses.

• Identity Theft Protection

  By using an EIN instead of a Social Security number (SSN) for business activities, individuals can help protect their personally identifiable information (PII) and reduce the risk of identity theft.

A single-member LLC without employees may not be legally required to obtain an EIN by the IRS for federal income tax purposes. However, even in these situations, obtaining an EIN is often strongly recommended due to the benefits it provides in terms of financial management, credibility, and overall business operations.

Who Needs an EIN?

In some cases, a sole proprietorship does not require an EIN. It is the only type of business entity that does not. In this type of business, the business owner files their taxes using their Social Security number. Sole proprietorships, partnerships, and even some LLCs also use this type of pass-through taxation. Although sole proprietorships are not required to have an EIN, they can obtain one to streamline tax filing and banking processes.

The business types that do require an EIN are:

• LLCs

  Single-member LLCs may not require an EIN, but they can obtain one to make opening a business bank account easier. Giving out the EIN instead of their Social Security number also helps them protect their identity. The IRS requires multi-member LLCs to have an EIN.

• Other Entities

  Partnerships, corporations, trusts, and even estates must also obtain an EIN to operate legally in the U.S. The IRS issues and enforces laws regarding EINs.

Any business entity that hires employees must legally have an EIN to function in the United States. If you have a business retirement plan, need licenses to perform your work, or work in certain industries, you will also need an EIN.

How to Get an EIN for an LLC

Since most LLCs do require an EIN, you should apply for one after registering your LLC with the Secretary of State. Obtaining an EIN is a relatively simple process. Additionally, applying for an EIN is free; no fees are required.

Obtaining an EIN is easy, and you can use two methods to do so. They are as follows:

• By Mail

  Visit the IRS website and download Form SS-4 and print it out. Complete the form with all the information required (see below). Alternatively, you can mail the form to the IRS using the address printed on the form. You may have to wait a bit longer for your EIN to arrive by mail.

• Online Application

  You may also choose to submit your application to the IRS digitally. Visit the IRS website and complete all the required fields. Once you have completed and submitted the online application, you will immediately receive your new EIN after the IRS validates the information. Validation takes place during the application process. Once complete, you can download and print your confirmation letter, which includes your EIN.

• By Fax

  Visit the IRS website and download Form SS-4, print it out, and complete it with all the necessary information (see below). Fax your completed form to the number listed on there. If you use fax, the IRS will fax you back a confirmation letter with your new EIN within four business days.

The online application option is by far the fastest way to get your EIN. Fax is the second quickest option, and if you apply by mail, you may have to wait up to four weeks to receive your confirmation letter with your EIN.

What Information is Required for an EIN?

When applying for an EIN, you must provide the IRS with detailed and specific information about yourself and your business. Those details are as follows:

Along with the information above, you must also identify your business type from the list of industries below. Use your best guess if nothing matches up perfectly.

• The legal name of your business. If you have registered the sole proprietorship under your name, then you will use that. If you have a trade name, “Doing Business As (DBA)” name, you must include that as well.
• Your business’s legal address, including state and country.
• Your name and tax ID (SSN). As an LLC, you will have the authority to control and manage the business, funds, and all assets.
• The type of entity (corporation, LLC, sole proprietorship, partnership) and the date you started the business.
• Does your business involve gambling, and do you sell alcohol, tobacco, or firearms?
• You must provide the reason you are applying for an EIN. Some examples are acquiring an existing business, starting a new business, or hiring employees.
• The highest number of employees you expect to hire within the next 12 months. You must also designate when you will pay employment taxes (annually or quarterly) and the first date you paid wages to your staff.

Along with the information above, you must also identify your business type from the list of industries below. Use your best guess if nothing matches up perfectly.

• Accommodation & food service
• Construction
• Manufacturing
• Finance & Insurance
• Healthcare & social assistance
• Retail
• Real estate
• Rental & leasing
• Transportation & warehousing
• Wholesale-agent/broker or Wholesale-other
• Other

How Long Does It Take to Get an EIN for an LLC?

The IRS offers three different ways to get an EIN for an LLC (mail, fax, and online). The time it takes to receive your EIN depends on the route you take to obtain it. The timetables for each method are listed below:

• Online

  This is generally the fastest method, as you'll receive your EIN immediately upon successful completion and verification of the application.

• Fax

  You can fill out and fax Form SS-4 to the IRS. Processing time is usually about four business days.

• Mail

  Mail is the slowest method for obtaining an EIN for an LLC. Completing and mailing Form SS-4 can take approximately four weeks to process.

Benefits of Having an EIN for Your LLC

Even if you aren’t legally required to get an EIN, there are many reasons to get one anyway. An EIN is an official identification number issued by the federal government that can help protect your company and pave the way for future growth. Some of the benefits of having an EIN are as follows:

• Protect Against Identity Theft

  Most LLCs are required to provide their clients with a unique identification number (usually your Social Security number) so they can issue a 1099 at tax time for the revenue paid to you. The problem with giving out your SSN is that it opens you up to identity theft. You have no idea how or where your clients store your personal information, including your Social Security number. If stored online, it could be subject to a hack and then end up on the dark web. Having an EIN protects your SSN, and you can give clients your business ID and keep your personal information safe.

• Separate Business and Personal Finances

  It’s always a good idea to separate your business and personal finances, especially at tax time. If you are ever audited, you want to be able to demonstrate that the business income and expenses were kept separate from your individual accounts. Having an EIN allows you to open a business bank account and keep your personal and business finances separate easily.

• Legitimize Operations

  For LLCs that work out of their home, you can deduct certain expenses like a “home office deduction,” but only if you have an EIN. The IRS considers businesses that operate with an EIN to be a legitimate operation. Your clients may also view you as more credible and reliable if you have an EIN. Another important distinction is that an EIN helps delineate you as a contractor, not an employee.

• Prepare for Business Growth

  If you ever plan on growing large enough to have employees, you will need an EIN. Most banks will also require that you have an EIN to open a business checking account. You can also obtain loans and apply for financing with an EIN.

• Establish Business Credit

  An EIN allows you to establish business credit that is separate from your personal credit. This could be extremely helpful when you need financing or loans.

• Non-US Entity

  If you are an LLC working outside of the U.S. and have no social security number, an EIN can help you in many ways. You will need a valid business ID to conduct business in the United States.

• Comply with State Rules

  Business formation is done at the state level. Some states require an EIN for you to operate legally within the jurisdiction. Check with your state before deciding whether to obtain an EIN.

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