Apply for an LLC Tax ID (EIN) Number
Do LLC’s need a Tax ID (EIN) Number?
Do LLC’s need a Tax ID (EIN) Number?
Yes, LLC’s need a Tax ID for:
- Hiring Employees:Every limited liability company with employees is required to get a tax ID.
- Opening a Business Bank Account: An LLC must present the company’s tax ID number to establish a business bank account.
- If the LLC has 2 or more members: All LLC’s that have 2 or more members are required to obtain a Tax ID (EIN).
- Working with Vendors Certain vendors may not do business with an LLC that does not have a tax ID. LLCs that sell items to the public are required to get a tax ID number. Having a tax ID number allows an LLC to purchase items at wholesale from certain vendors, whereas this may not be possible for a business that does not have a tax ID number.
Limited Liability Company Definition
A limited liability company (LLC) is a structure allowed by state statute. An LLC is formed by filing articles of organization with the individual state’s secretary of state. Owners of an LLC are called members. Members may include individuals, corporations, other LLCs, and foreign entities. An LLC can be formed by one or more members, and there is no maximum number of members.
There can be no more than one active LLC with the same name in the same state.
For federal tax purposes, an LLC may be treated as a partnership or a corporation, or be disregarded as an entity separate from its owner.
An LLC can also be organized as a professional limited liability company (PLLC) or a limited company (LC).
LIMITED LIABILITY COMPANY FREQUENTLY ASKED QUESTIONS
What is a Tax ID (EIN) Number?
An EIN Number (also called a Tax ID) stands for Employer Identification Number. Most people consider an EIN Number like a Social Security Number (SSN) for a business. The IRS requires most businesses to obtain an EIN in order to identify the business for tax purposes. Some advantages of getting your Tax ID / EIN Number include: the ability to open a business bank account or line of credit, to hire employees or to apply for certain business licenses.
Who needs a Tax ID (EIN)?
An EIN is required for many reasons for businesses, taxable entities and non-profit organizations. If any of the follow apply to your business or entity you will need an EIN:
- Hiring Employees
- Operate your business as a Corporation or Partnership
- If you will file any of following tax returns: Employment, Excise or Alcohol, Tobacco and Firearms
- Have a Keogh Plan
- If you’re involved with any of the following organizations/entities:
- Trusts (except certain grantor-owned revocable trusts)
- Real Estate mortgage investment conduits
- Non-profit organizations
- Farmers’ cooperatives
- Plan Administrators
If I don’t need an EIN why should I get one?
Even if your business, organization or entity is not required to obtain an EIN, it is highly recommended that you obtain one when starting or forming your business/organization for many reasons:
- Use your EIN instead of your SSN on business applications and licenses to protect your personal information
- Many state and local permits require that you have an EIN
- An EIN is required to open a business bank account
- EINs help to establish business credit history
- Minimize delays when you decide to hire employees
What is a Responsible Party?
Every EIN application requires that a person who is a principal officer, general partner, grantor, owner or trustor be designated as the primary point of contact and responsible for receiving correspondence from the IRS related to the entity. This person is called the “responsible party” by the IRS. This person controls, manages or directs the applicant entity and disposition of funds and assets. If there is more than one responsible party for the entity, please list the primary person that you would like the IRS to recognize as the responsible party.
Under the current revised version of the IRS EIN application, a responsible party is defined as:
“For entities with shares or interests traded on a public exchange, or which are registered with the Securities and Exchange Commission, “responsible party” is (a) the principal officer, if the business is a corporation, (b) a general partner, if a partnership, (c) the owner of an entity that is disregarded as separate from its owner (disregarded entities owned by a corporation enter the corporation’s name and EIN), or (d) a grantor, owner, or trustor if a trust.”
“For all other entities, “responsible party” is the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the entity and the disposition of its funds and assets. The ability to fund the entity or the entitlement to the property of the entity alone, however, without any corresponding authority to control, manage, or direct the entity (such as in the case of a minor child beneficiary), does not cause the individual to be a responsible party.”