Do I Need an EIN for My LLC?

If you're starting a business, one of the first things you'll want to figure out is whether you need an EIN for your LLC. The answer depends on how your LLC is set up.

Your LLC and EIN go hand in hand for most businesses. In this guide, we will explain what an EIN is, when you need one, how to apply, and what to do once you have it.

What is an EIN?

An Employer Identification Number, or “EIN,” is a nine-digit number assigned by the IRS. It's used to identify employers and businesses. You might also hear it called a federal tax ID number.

People sometimes wonder if an EIN and an LLC are the same thing. They're not. Here's the difference:

• An LLC is your business structure. It's the legal entity you create with your state.
• An EIN is your business's tax ID number. It's how the IRS identifies your LLC.

Your EIN and LLC work together to keep your business in good standing with the IRS, your state, and your bank.

When do I need an EIN for an LLC?

Most LLCs need an EIN. If your LLC has more than one member, has employees, or is taxed as a partnership or corporation, you're required to have one.

You need an EIN if your LLC:

• Has more than one member
• Has employees or plans to hire
• Is taxed as a partnership or corporation
• Files excise, payroll, or other employment-related taxes
• Has a Keogh retirement plan

You may not need an EIN if your LLC:

• Is a single-member LLC with no employees
• Is taxed as a sole proprietorship

In those cases, you can use your Social Security number as your tax ID. But even then, getting an EIN helps keep your personal and business finances separate. 

Benefits of an EIN

You might be wondering, do you need an EIN for an LLC that's small or just getting started? Even if the IRS doesn't require it, there are still plenty of good reasons to get one:

• Keeps your personal and business finances separate: Using your SSN for business banking and taxes blurs the line between you and your LLC. An EIN creates a clear boundary.
• Lets you open a business bank account: Most banks ask for an EIN to open a business checking or savings account.
• Build business credit: With an EIN, you can start building a credit history for your business separate from your personal score. This matters if you need a loan or line of credit later.
• Protects against identity theft: Every time you hand out your SSN on a business form, you create risk. An EIN keeps your personal number off invoices, contracts, and tax documents.
• Adds credibility: Some vendors, partners, and clients may take your business more seriously when you operate with an EIN rather than a personal Social Security number.

How to get an EIN for your LLC

Applying for an EIN is free and easy. Here's how you can do it step by step:

1. Make sure your LLC is officially formed first: Your Articles of Organization need to be approved by your state before you apply. The IRS will ask for your LLC's legal name and formation date.
2. Go to the IRS website: The fastest way to get an EIN is through the IRS online application. Note: this tool is available only at certain times throughout the week.
3. Complete the application: You'll answer questions about your business type, structure, and reason for applying. The entire process takes roughly 10-15 minutes.
4. Receive your EIN: Once you submit, you'll get your EIN right away. 

If you would rather not apply online or the online option is not available to you, you can also mail or fax Form SS-4 to the IRS. Mailed applications typically take four to five weeks to process.

If you're not sure what LLC documentation you need before applying, a LegalShield lawyer can walk you through it.

What to do after getting an EIN

Once you have your EIN, there are a few next steps to get your business running:

• Open a business bank account: This keeps your personal and business finances separate, which is important for tax reporting.
• Register for state and local taxes: Depending on your state, you may need to register for sales tax, payroll tax, or other business-related taxes.
• Set up payroll: If you plan to hire employees, your EIN is required to run payroll and file employment taxes.

Learn more about EINs with LegalShield

Getting an EIN is straightforward, but it's just one piece of the puzzle. A lawyer can help make sure your LLC is properly set up, with the right contracts, operating agreements, and documentation in place before you apply. 

LegalShield's Small Business legal plans include consultations on topics like EIN registration and LLC formation, so you don't have to figure it out alone. Check out LegalShield's business legal plans to connect with a lawyer who can help.

Frequently asked questions

Does every LLC need an EIN number?

Not every LLC needs an EIN, but most do. Single-member LLCs with no employees can use the owner's Social Security number for tax purposes. However, if your LLC has multiple members, has employees, or is taxed as a corporation or partnership, you're required to have one.

Should a single-member LLC use an SSN or an EIN?

You can use either, but an EIN is the safer option. Using your SSN for business taxes and banking means your SSN shows up on invoices, contracts, and government forms.This increases your risk of identity theft. An EIN gives you the exact same tax ID functionality without exposing your personal information.

Do you get an EIN when you become an LLC?

No. Forming your LLC and getting an EIN are two different steps. You'll need to form your LLC with your state first. Then, you apply for an EIN through the IRS. The EIN application is free, and you can get your number in minutes through the IRS website.