Whether you need to get any type of tax number for your LLC simply depends on what type of LLC you have. If you are a single-member LLC, you yourself need to have a tax ID number – not your LLC. But if your LLC has any employees or is composed of more than one owner, you are required to get a tax ID number, also known as an EIN (Employer Identification Number) for your EIN. So the simplest answer is, no matter what type of LLC you own, you will need to have some sort of tax number – whether for yourself or for the LLC.

What is an EIN?

An EIN (also called a FEIN or the Federal Tax Identification Number) is a unique nine-digit number that’s assigned to various business entities in the U.S. for the process of identifying them. You can get an EIN through the IRS (Internal Revenue Service), which is offered as a free service by them. 

An EIN is like having a Social Security Number, but instead it’s for a business instead of just a person. You need it for so many things, which you will soon realise in your business. So it’s highly recommended that it’s one of the first things you do when setting up your business – and even better, it’s at no extra cost to you.

How do I get one?

Previously the IRS would request a form, but today you can also apply online, which the IRS encourages business owners to do.

You can use the IRS website or speak with a representative at this number: 800-829-4933. An LLC might get a tax ID number by faxing or mailing the form SS-4 to the IRS. You’ll need to provide information, such as the number of employees in the LLC as well as the nature of the business’ activities, and other basic information like the name and address of the LLC. As soon as the online form or telephone session is over, the IRS issues a tax ID number to the LLC. 

When applied for by mail, it can take up to 4 weeks to receive – doing it online will save you so much time and allow you to do so many things with your business faster. Faxing Form SS-4 will allow this process to speed up – being given to you in only 4 business days.

Why might I need an EIN?

There are a few reasons you have to get an EIN, such as the nature of your company. But, there are some reasons you might want to get an EIN too, to let you become much more flexible with things you do. Here are a few reasons why you might want to consider getting an EIN:

Banking and finance

Most of the time banks and credit unions will need an EIN from you, if you want to open a bank account for any type of business, estate or non-grantor trusts. Having an EIN also means you can get people to help you by funding you or investing in you.

Hiring employees

If you want to hire any employees at all, you’ll need an EIN, so that the IRS can track your payroll tax remittances. As well as this, any business that isn’t a sole proprietorship or a one member LLC, you must get an EIN too. Your EIN is used to track business income taxes. Sole business owners can use their own EIN for this.

Retirement plans for self-employed

Anyone who is self-employed that decides to form a Keogh plan needs to obtain an EIN to start up these plans and facilitate them in federal tax treatment. 

TRUiC has more information on what an EIN number is and why you might need one. Visit their site for more.

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