Do I Need a New EIN if I Move My LLC to Another State?

An LLC offers members flexibility, limited liability protection, and other significant benefits. Upon registering your LLC, you typically need to apply for an EIN from the IRS, which issues them. Your EIN allows you to develop a business credit history, apply for a business bank account, and protect your personal identity. A crucial question that many LLC owners ask is, “Do I need a new EIN if I move my LLC to another state?”

What is an EIN?

An Employer Identification Number (EIN) is a unique identification number issued by the IRS to a business. Companies use their EIN when paying employees, filing taxes, and opening bank accounts. It is like a Social Security number for individuals. In some cases, an EIN is also referred to as a Federal Taxpayer Identification Number (FTIN). Your EIN is also used for other purposes, for example, when applying for industry permits or licenses.

Why Does an LLC Need an EIN?

Although most sole proprietorships don’t need an EIN, LLCs generally do. There are several reasons why an LLC needs an EIN. They are as follows:

• Open a Business Bank Account

  When opening a business bank account, the financial institution usually requires you to have an EIN.

• Hiring Employees

  Any business that hires employees must have an EIN to report payroll and unemployment taxes to the IRS.

• Your Company is Tax Exempt

  If your company qualifies for tax-exempt status, you must have an EIN to report your income and expenses and file tax returns.

• Change Your Business Structure

  If you change your business structure from one entity to another, you must apply for an EIN. An example might be changing from an LLC to a corporation.

• Filing Pension or Excise Tax Returns

  If you file pension or excise tax returns as part of your business, you must have an EIN to use when filing.

• Buying or Inheriting an Existing Business

  If you buy or inherit an existing business you plan to run as a sole proprietorship, you must get an EIN.

• Filing for Bankruptcy

  If you declare bankruptcy (Chapter 7 or Chapter 11), you must have an EIN.

• Work with Nonprofits

  Nonprofits require an EIN to file their taxes and maintain their tax-exempt status. Therefore, anyone they work with must also have an EIN.

• Apply for Business Licenses

  If you apply for business licenses in your chosen industry, you may also need an EIN.

• Have a Keogh Plan or Solo 401(k) Retirement Plan

  If your company has a retirement plan, you will need an EIN.

• Establish Credit

  You cannot establish business credit without an EIN.

How to Get an EIN

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.

Use one of the three methods below to do so.

• 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 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.

• By Fax

  Visit the IRS website, 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:

• The legal name of your business. If you have registered the LLC 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).
• 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

Who Needs an EIN?

A sole proprietorship is the only type of business structure that does not require an EIN. 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 make tax filing and banking processes smoother.

The business types that do require an EIN are:

• LLCs

  Single-member LLCs may not require an EIN, but obtaining one can facilitate the process of opening a business bank account. 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.

• Sole Proprietorships

  If a sole proprietor hires employees or wants to open a business-only bank account, they are required to obtain 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.

Benefits of Having an EIN

Even if you aren’t legally required to get an EIN, there are many reasons to do so. An EIN is an official identification number issued by the federal government that can help protect your company and enable you to access resources you couldn’t otherwise. Some of the benefits of getting an EIN as a sole proprietor are:

• 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.

• Legitimize Operations

  For some LLC members who 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.

• Protect Against Identity Theft

  Many LLC members must provide their clients with an ID number (usually your Social Security number) so they can issue a 1099 at tax time for the revenue they paid 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 personal accounts. Having an EIN allows you to open a business bank account and keep everything separate easily.

• 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 enables you to establish business credit that is distinct from your personal credit. This could be extremely helpful when you need financing or loans.

• Non-US Company

  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.

Do I Need a New EIN if I Move My LLC to Another State?

No, you generally do not need a new EIN if you move your LLC to another state, as long as you maintain the same business structure and ownership. The EIN is tied to the business entity, not its location.

When the IRS issues your EIN, it is linked to your business name and entity type, not your state. The IRS is a federal agency that applies to all states. As long as you don’t change your business structure, then you are fine. If you do switch from an LLC to another type, you will need to apply for a new EIN.

However, some states may require you to register your LLC as a “foreign entity” to operate there. This involves filling out paperwork and filing it with the Secretary of State in your new location.

Remember to update your location information with the IRS after relocating your business.

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