Do I Need an EIN for my LLC?

[MarkVancy]

Even if you don't have employees, you may need an Employer Identification Number (EIN) issued by the IRS if you own a small business or work for yourself. 

A business entity's Employer Identification Number (EIN number) is also known as a Federal Tax Identification Number. In most cases, businesses require an EIN. There are a variety of ways to apply for an EIN, and you can now do so online.

 

An EIN, otherwise called a Government Duty ID Number, is utilized to distinguish a business element for charge purposes.

 

Therefore, you may not require an EIN if you own a small business or work for yourself. On the off chance that you responded to every one of the above inquiries with a "No", you are most likely a sole owner or an independently employed individual like a self employed entity and since none of the circumstances above apply, you really want not fret about the EIN. If that is the case, the IRS is fine with you using your Social Security number as your business's tax identification number. 

In the United States, a business structure known as a limited liability company (LLC) shields its owners from personal liability for the company's debts or liabilities.

 

We should investigate Questions 1 and 2, since almost certainly, you will respond to those inquiries with a "Yes" than Questions 3 and 4.

 

First issue: Do you have a job?

 

A C corporation, also known as a c corp, is a legal form of a corporation in which shareholders, or owners, are exempt from taxation.

 

Having employees, issuing paychecks, withholding income tax, social security tax, and medicare tax, making payroll tax payments, and filing payroll tax returns (such as Form 941 and Form 940) are the most common reasons for sole proprietors to require an EIN.

 

An employee of a sole proprietorship must be someone other than the sole proprietor for the purposes of the EIN. Due to the fact that payments made to the sole proprietor from business profits are not considered wages, the sole proprietor is never considered an employee of the sole proprietorship.

 

So in the event that you are a sole owner and have no other person performing fill in as a representative for your business, then you have no workers and have no requirement for an EIN. 

 

One common legal business structure for small businesses is an S corporation or S corp, also known as an S subchapter.

 

2nd Question: Are you a partnership or a corporation?

 

An EIN is required to establish a corporation or partnership. However, note that the limited liability company (LLC), which is becoming an increasingly popular entity type, is not mentioned in Question 2.

 

The regulations can get tricky with an LLC, so pay close attention here.

 

Keep in mind that when states created the LLC, the IRS did not create a new tax classification for it. For LLCs, the IRS uses the same tax entity classifications it has used for business taxpayers: partnership, C corporation, S corporation, and sole proprietorship The IRS always classifies an LLC as one of these entities for tax purposes.

 

If you choose to be treated as a sole proprietorship for tax purposes and are a single-member LLC (in LLC lingo, "member" means owner), you are not required to obtain an EIN (unless you respond "Yes" to Questions 1, 3, or 4). However, you are required to obtain an EIN if you are a single-member LLC and choose to be treated as a corporation for tax purposes. Additionally, you must obtain an EIN if you are a multi-member LLC, regardless of how you choose to be taxed (partnership or corporation).