Employer Identification Number (EIN): What kind of business entity requires it?

By The Law Office of Yoel Molina.
 
It is possible for the IRS to keep track of wages and other payments made by your company to its owners and employees by using an employer identification number (EIN), also called a taxpayer identification number (TIN). Setting up a company bank account that is distinct from your personal bank account with an EIN is also helpful. Your company's organizational structure will determine if you need to obtain an EIN. Whether you require an EIN and how to obtain one are covered in the following paragraphs.
 
Corporations: An EIN is required for all S and C corporations.Partnerships: An EIN is required for all general and limited partnerships.LLCs: For IRS reasons, some one-person LLCs can get away with using their own Social Security number, but if your LLC will employ people or if it has more than one member, you must register for an EIN for the LLC.Multiple-Member LLCs: Whether or not you now have (or will eventually have) workers, your LLC needs an EIN from the IRS if it is created with more than one member.
Single-Member LLCs With No Employees: You do not need to register for an EIN for your firm if you are founding a one-member LLC and do not intend to hire staff (and you will not operate a trucking, transportation, or similar business that will be required to pay federal excise taxes, nor will you have a Keogh plan). You can use your own Social Security number to file federal taxes; don't worry, you won't have to disclose it on any public records. However, be aware that some banks and lenders with which you do business may demand that you have an EIN. You may always obtain an EIN for your LLC if you want to, whether it's to make dealing with banks simpler or simply to keep your personal and corporate funds as distinct as possible.
If you are changing a sole proprietorship into an LLC and you already had an EIN for your sole proprietorship, you may continue to use it for your LLC as long as it doesn't have any workers.
Single-Member LLCs With Employees: Your one-member LLC must file for an EIN if you intend to hire staff within the next 12 months. The IRS may actually give you two EINs in this situation—one for the LLC and one for you as the single owner. Any money transferred from the LLC to an LLC member must be reported under the member's EIN number, and employment taxes must be filed under the LLC's EIN.
Note that you may need to apply for another EIN if you are changing your sole proprietorship to an LLC and you have recruited (or intend to hire) employees but already have an EIN. The LLC must record any payments made to you as the only owner under your EIN as follows: While employment taxes must be recorded under the LLC's EIN, any money paid from the LLC to you as the only owner must be reported under your EIN.
In the event that your LLC chooses to be taxed as a corporation. Your LLC must apply for an EIN if it decides to use corporation taxation.
 
Monopsonistic Businesses:
In the event that your sole proprietorship won't employ anyone. You don't need to apply for an EIN if you don't intend to hire staff, don't operate a Keogh plan, or don't plan to owe federal excise taxes. You don't have to disclose your Social Security number on any public documents; you can use it for federal tax purposes. But keep in mind that some lenders with whom you do business can demand that you obtain an EIN for your company.

If you plan to hire staff for your sole proprietorship. You must apply for an EIN if your company intends to hire personnel in the upcoming year.
 
Procedures for Obtaining an EIN:
Apply online. The IRS website has an online EIN application form. A number of questions must be answered, and you must submit your Social Security number (or the Social Security number of one of the owners of your business). You will receive an EIN right away if the IRS can verify the data you provide.

Phone your application in. Call the Business and Specialty Tax Line of the IRS at (800) 829-4933 to get an EIN. You will obtain your EIN via a series of phone interviews with questions.

Send a postal application. On the IRS website, you can find IRS Form SS-4, which you can fill out and mail in. You'll receive your EIN from the IRS in four weeks.
 

If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020, option 1