LLC ATTORNEY BLOG

How to Get an EIN Number

July 04, 2024

Securing an EIN number is one of the most critical elements to having a legitimate, government-compliant business in the United States. In this article, we will cover all of the details about what an EIN is, who requires one and why, how to apply for your EIN, the specific importance of EINs for LLCs, and when you must update the IRS and possibly even apply for a new EIN.

What is an EIN?

Think of an Employer Identification Number, also known as an EIN or FEIN, as a Social Security Number (SSN) for your business. An EIN, which you can apply for and obtain through the IRS, is a nine-digit number that identifies a business organization, giving you one place to attach all tax-related information and transactions for tax time.

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Who Needs an EIN?

From sole proprietorships to large corporations, an EIN is required for IRS federal tax obligations. It establishes credibility as a legitimate business operation in the United States and allows you to efficiently engage in numerous common business operations.

Key activities that the IRS attaches to your EIN include:

  • Hiring and paying employees
  • Creating business structures such as partnerships, corporations, limited liability companies (LLCs), and others
  • Filing tax returns on employment, excise, alcohol, tobacco, and firearms
  • Withholding taxes on income paid to non-resident aliens
  • Partaking in specific types of activities like Keogh plans, trusts, estates, nonprofits, and farmers’ cooperatives

Key uses of an EIN include:

  • Hiring employees
  • Opening business bank accounts or applying for business loans
  • Filing Corporate Transparency Act (CTA) and beneficial ownership information (BOI)
  • Filing tax returns for employment, excise, alcohol, tobacco, and firearms
  • Withholding taxes on income, other than wages, paid to a non-resident alien
  • Handling Keogh plans or other types of retirement or benefits plans

Types of businesses that require an EIN and why:

  • Corporations: Considered distinct legal entities, all corporations require an EIN. Material changes to corporations, including a corporation name change, structural transitions, or becoming a subsidiary might require you to apply for a new EIN.
  • Partnerships: All business partnerships require an EIN. Again, material changes to partnerships, including if it restructures, dissolves, or if one partner takes full control and moves into a sole proprietorship could require you to apply for a new EIN.
  • Limited Liability Companies (LLCs): Due to the CTA, effective January 1, 2024, all LLCs now require an EIN, regardless of their size, whether they are single- and multi-member LLCs, or whether they employ others, simplifying tax filing and compliance across all LLC types.
  • Employee Benefit Plans: All types of employee benefit plans, including Keogh plans, Solo 401(k) plans, and SEP IRAs, are required to obtain an EIN for management and reporting purposes.
  • Personal Service Corporations: Any business providing personal services such as consulting, engineering, or legal advice is considered a corporation and; therefore, needs an EIN.
  • Real Estate Mortgage Investment Conduits (REMICs): Because they’re frequently structured as partnerships, REMICs require an EIN for tax filings and compliance.

Securing an EIN is essential for validating your business's financial operations, bolstering credibility, and fulfilling federal financial and tax reporting obligations. Businesses meeting these criteria should prioritize obtaining an EIN early to ensure compliance and streamline business transactions.

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How to Apply for an EIN

Applying for an EIN can be completed online, via mail, or fax. If the applicant is international and does not have an ITIN, they must apply for an EIN by phone.

We recommend the online application process as it’s typically the fastest method, often resulting in an instant turnaround.

Applying Online

Consistently the fastest method, online applications are usually processed instantly, during your online session. This method is available for all businesses whose principal business, office, agency, or legal residence, is physically based and present in the United States or U.S. Territories.

Applying by Fax or Mail

To apply by fax or mail, you must first send in your completed Form SS-4. After this, processing can take about 21-45 days to receive your EIN by fax or up to four weeks by mail. These timeframes assume that all information on your completed Form-SS-4 is correct.

You will receive your EIN number via the same method through which you applied. If you apply by fax, please ensure you include the applicant’s fax number on your application, as you will receive your EIN number by fax. If applying by mail, please make sure your mailing address is correct, as you will receive your EIN number by mail.

Find out where to fax or mail your Form SS-4.

Applying by Telephone

International Applicants who are outside of the U.S. and who do not have an ITIN are required to apply for their EIN by phone at 267-941-1099 (not a toll-free number) 6:00 a.m. to 11:00 p.m. (Eastern Time) Monday through Friday.

The person making the call must be authorized to receive the EIN and be able to answer questions about the Form SS-4.

Apply for an Employer Identification Number (EIN)

To authorize your representative, you must complete the Third Party Designee and fill out the signature areas on the Form-SS4. Once the EIN is assigned and provided to the designee, the representative’s authority will be terminated.

Are you an international applicant with an ITIN and a physical presence in the U.S.?

In that case, you are eligible to apply online, which is a simpler and faster process, with instant EIN approval.

Information Required to Apply

To complete the Form SS-4, which is the first step of your EIN application process, you will need to provide the following information:

Make sure you have all of this information ready before starting your application process, because once you have started your application, you cannot save and return to it later. You will have to start again.

Common Mistakes to Avoid

Provided that you’ve filled out your Form-SS4 correctly, applying for an EIN can be a fast and smooth process. However, there are some instances in which your application could be rejected or in which you receive an IRS error reference number.

Some common mistakes that you can pay close attention to and avoid include:

Providing Incomplete or Inaccurate Information

Incomplete or inaccurate information will result in delays in receiving your EIN, so it’s important to ensure that the information you submit is full and accurate.

The most common information that applicants get wrong includes:

  • The legal business name
  • Your legal name
  • Business address, street address, country, and state
  • Name and SSN or TIN of the responsible party
  • Type of business structure
  • The number of members (if an LLC)
  • Key business dates
  • Primary activities of the business
  • Previous application (if applicable)

Submitting Multiple Applications

Every business entity requires a single and individual EIN, even if the responsible party or applicant is the same. If you have multiple businesses, you must treat them as completely separate entities. Submitting multiple applications for the same business can result in system errors, delays, and application rejection.

Tips if you’re applying for EINs for multiple businesses:

  • Submit a separate Form SS-4 form for each additional EIN
  • A single taxpayer can only apply for one EIN daily – every Form SS-4 must be dated or filed on a separate day
  • Do not submit multiple forms for the same business entity

Incorrect Selection of Business Structure Type

You must know the correct legal structure for your business, as each business entity is taxed differently. When filling in your Form SS-4, make sure you know the structure type for your business:

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What to Do After Receiving Your EIN

Once you receive your EIN number, take these next steps to ensure that your business can utilize it properly:

  • Update your business records to include your EIN wherever necessary
  • Keep your EIN certificate in a safe and secure place
  • Make a copy of your EIN certificate to keep in a second safe and secure location
  • Ensure you update your accountant and IRS information for future tax filing purposes
  • Apply for appropriate business bank accounts and loans, as needed

EIN for LLCs

Due to the implementation of the CTA, obtaining an EIN is now mandatory for all LLCs as of January 1, 2024, regardless of their size, whether they have employees, or whether they are a single-member or multi-member LLC.

Beyond legal compliance, having an EIN for your LLC comes with several advantages that can dramatically and positively impact how you manage and grow your business.

Some of the reasons that having an EIN for your LLC is beneficial include:

  1. Financial Clarity and Security
    An EIN distinguishes between your personal and business assets, protecting your personal assets from potential business liabilities.
  2. Banking Made Easy
    From accounts to loans and financing options, having an EIN broadens the range of banking products available to your business, boosting your financial operations.
  3. Safeguard your Identity
    Using an EIN instead of your Social Security Number (SSN) for business transactions keeps your personal information secure and reduces the risk of identity theft.
  4. Building Business Credibility
    Your EIN signals that your business is established and reliable, and can help you build a strong credit score through responsible financial practices like timely payments on credit facilities.

For more information about why an EIN is critical to your LLC, click here!

Maintaining and Updating Your EIN

While an EIN will follow a business for the entirety of its existence, there are some circumstances when you might need to inform the IRS of important changes to the business or even apply for a new EIN, such as:

There are many other possible reasons you might need to update the IRS on your business status and apply for a new EIN. Consulting a dedicated professional at LLC Attorney can help clarify when you need to update the IRS on your business, and if and when you need to apply for a new EIN.

Wrapping Up

An Employer Identification Number (EIN) is essential for almost all businesses in the U.S., taking on the same role as a Social Security Number (SSN) for individuals. This unique nine-digit number issued by the IRS is necessary not only for legal compliance but also for engaging in many day-to-day business activities such as hiring employees, filing all types of tax returns, and opening business bank accounts.

The application process for an EIN can be completed online, by mail, fax, or phone for international applicants, with the online method being the fastest. Businesses of all types, including corporations, partnerships, and LLCs, are required to obtain an EIN to comply with federal tax obligations and establish legitimacy. Properly maintaining and updating the EIN is crucial for business operations, and any significant changes in the business may require a new EIN.

The best time to apply for an EIN is as early as possible, to ensure that your business is always organized, tax and IRS-compliant, and can take advantage of all of the benefits an EIN can offer.

Need assistance setting up your business and EIN number? LLC Attorney are here to help.

Call us to book a consultation with one of our specialists today.
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