Your LLC’s Federal Tax ID Number (EIN)
**Short Answer: A Federal Tax ID Number is to a business what a Social Security Number is to an individual. It’s used for taxes & banking and it also identifies your company to the IRS.**
A Federal Tax ID Number is issued by the IRS to business entities.
It is also known as an EIN, or Employer Identification Number.
For simplicity, we will refer to it as the EIN.
An EIN is to a business what a Social Security Number is to an individual.
It basically identifies your LLC to the IRS.
Even though it is called an Employer Identification Number, it does not mean that you have to have employees.
What Are EINs Used For?
EINs are used for:
– Opening business checking, savings, or investment accounts.
– Filing taxes.
– Handling employee payroll (if applicable).
– Obtaining business lines of credit or business loans.
– Obtaining credit cards in the name of the LLC.
– Applying for business licenses.
Wait For LLC Approval
You must wait until your LLC is approved by the state before obtaining your EIN.
You do not want to have any issues with an EIN assigned to the wrong LLC (dealing with the IRS to cancel an EIN is a pain in the neck).
What Does an EIN Look Like?
An EIN is similar to a Social Security Number in that it has 9 digits.
To differentiate an EIN from an SSN, there are 2 digits followed by a hyphen and then 7 more digits.
An EIN will look like this: 68 – 3302189
How Much Does an EIN Cost?
An EIN is free.
No, really, they’re completely free.
You can obtain an EIN from the IRS.
Unfortunately, many websites will charge you $50 – $100.
How to Obtain an EIN
EINs can be obtained in 3 ways: by mail, by fax, or via the IRS’s online application.
An EIN by fax takes 4 days. Too long.
An EIN by mail can take up to 4 weeks. Way too long.
An EIN by online application takes 15 minutes.
Your EIN will be issued immediately after you answer all of the questions in the online application.
You will then be able to save and print your new EIN, as well as your Confirmation Letter. Make sure to save copies of these and keep them with your LLC documents.
SSN for US Citizens or ITIN for non-Citizens (but not required)
You will need to have the member(s’) SSNs or ITINs ready before you begin the online application.
If you are a US citizen you will use your SSN (Social Security Number).
If you are a foreign national or non-US resident you can use your ITIN (Individual Taxpayer Identification Number).
If you are a foreign national or non-US resident and do not have an ITIN, you can still obtain an EIN from the IRS. You just can’t get it online. You need to file Form SS-4 by mail or fax and write “Foreign” on line 7b.
If you have questions for the IRS, their phone number is 1-800-829-4933. Additional IRS contact info here.
How do I Get the EIN Online Application?
Important: Unless your LLC has been approved, do not apply for an EIN.
Although many websites charge money for obtaining an EIN, it’s actually completely free ($0) from the IRS.
EIN Confirmation Letter
Once you finish the online application, you can download the EIN Confirmation Letter (Form CP-575) from the IRS’s website. If you apply my mail or fax, this form will be returned by regular mail.
Here is what it will look like:
Already Have an EIN for Your Business?
If you already have an EIN, it’s most likely attached to a Sole Proprietorship. (This is quite common.)
You’ll need to close out that EIN and get a different one for your LLC (after your LLC is approved).