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A n Employer Identification Number, or EIN, is crucial for business owners preparing to launch an LLC. There is, however, some confusion around when an EIN is required and what exactly it does, so we're here to clear things up. Find out if your single-member LLC needs an EIN, how to apply for one, and why you might want an EIN even if it's not required.
With EINS, you first need to determine what type of LLC you have and how it’s taxed. A single-member LLC is a business operated by just one owner, rather than multiple members or partners. It's similar to a sole proprietorship in this way, but the difference is that an LLC is a legal business entity with all the benefits of that designation.
Single-member LLCs can choose how they’re taxed, but most often, they're considered disregarded entities . This means the IRS views them similarly to sole proprietorships, making them subject to pass-through taxation (in which the owner’s profits are claimed as income on their personal tax return).
This flexibility is what makes LLCs such an appealing choice for business structures, but it can also lead to some confusion — especially for owners who aren’t sure if they need an EIN.
Wondering if you need an EIN or SSN for a single-member LLC? The answer could be either, depending on the circumstances. Single-member LLCs that do not have employees are considered disregarded entities and are free to operate without an EIN. In this case, the business owner’s Social Security number is required for tax filing purposes.
There are, however, benefits to using an EIN instead of an SSN, even if it isn’t required for your business.
Why opt for an EIN if you don’t need it?
Simply put, an EIN is a best business practice. Secure yours now to ensure smoother business processes in the future.
Why Does My LLCNeed an EIN?
EINs offer many benefits, including:
Privacy Protection ✔︎
Fraud Prevention ✔︎
Ability to Hire Employees ✔︎
Ease of Opening Business Account ✔︎
Help Building Business Credit ✔︎
Increased Chance of Loan Approval ✔︎
Like a Social Security number, an EIN is a unique nine-digit number that identifies your business to the government, specifically the IRS. And while it has "employer" in the name, you don't necessarily have to have employees in order to need or want an EIN.
So, which LLCs do require an EIN?
All multi-member LLCs are required to have an EIN, but the rules can get a little fuzzy when it comes to single-member LLCs. There are, however, a few instances in which a single-member LLC must secure an EIN, including:
Keep in mind that multi-member LLCs always require an EIN, so it's a good idea to plan ahead and secure one now if you’re thinking of bringing on a business partner .
Does My Business Need an EIN?
Required Sometimes Required Good to Have Multi-Member LLC ✔︎Single-Member LLC ✔︎Single-Member LLC No Employees ✔︎Single-Member LLC With Employees ✔︎Single-Member LLC Filing Taxes as Corporation ✔︎Single-Member LLC With Excise Tax Liabilities ✔︎
How to Get an EIN for Your Single-Member LLC
Ready to file an EIN for your business? Here are all the steps you need to take:
You’ll need to form your single-member LLC if you haven't already. An LLC comes with a wealth of benefits for business owners, and it’s a perfect choice for anyone looking for flexibility and cost-effectiveness.
You can form an LLC on your own or use a trusted business formation partner like Bizee. We offer $0 + state fee LLC formation to get you started at the right price.
You’ll need key business information to secure your EIN. Make sure you have your Articles of Organization handy, along with your personal information, the business’s registered name, and, in the case of multi-member LLCs, the names and addresses of all business members.
You can apply online directly with the IRS when you’re ready to obtain your EIN. It helps if you’re familiar with the IRS website and the guidelines for EIN application, including the following:
While applying for an EIN through the IRS website isn't difficult, you’ll need to make sure you have plenty of time dedicated to focusing on the process. That’s because EIN applications must be completed in a single session in order to be processed, and the session will time out after 15 minutes of inactivity.
If you prefer not to file online, you can submit your application by mail or fax to the IRS. Here's how:
By fax:
(855) 641-6935
By mail:
Internal Revenue Service
ATTN: EIN Operation
Cincinnati, OH 45999
All of this can be a hassle for busy business owners, especially those who aren’t easily available during regular U.S. business hours or don’t have a block of time to dedicate to the application process.
If this is the case for you, consider using an EIN filing service. Simply pay the service provider a fee and they'll quickly secure an EIN for you.
Incile’s EIN service will have your EIN waiting for you within a day, stored in your customer dashboard for easy access. This simplifies the process and gives you a centralized place to keep and access all of your important business documents.
Here are some of the most-asked questions about EINs and single-member LLCs:
A single-member LLC might need an EIN to open a bank account, but it varies based on the financial institution. It’s not uncommon for a bank to request an EIN when setting up a business account, especially if it’s being set up under the business’s name. However, it’s better to acquire an EIN before you start shopping around banks so you’ll be ready no matter what the requirements are.
A sole proprietor rarely needs an EIN, but it can be very helpful for an LLC. If you’re planning to hire employees , an EIN will be mandatory. It will also be needed if you choose to tax your LLC as a corporation and not as a disregarded entity.
An LLC and an EIN are not the same thing. An LLC is a legal business structure, while an EIN is a unique number used to identify your business to the IRS. Some businesses, like single-member LLCs, disregarded entities, and sole proprietorships can operate without an EIN. But in some cases, obtaining one is still a requirement (see above). An EIN is a good asset to have for your business, whether you’re planning to hire employees or not.
A single-member LLC is not the same as a sole proprietor or sole proprietorship. An LLC, whether single-member or multi-member, is a legally formed business entity that provides liability protection for the owner or owners’ personal assets. A sole proprietor is a single business owner who operates a sole proprietorship — a business that has no legal structure.
While many business owners begin as sole proprietors, most find that they prefer to form a legal structure to take advantage of the benefits, including limited liability.
You may need an EIN for an LLC with no employees, so it’s always best to check directly with a business formation expert or tax professional. Even if you have no employees, your LLC might need an EIN to apply for loans, open a business bank account, or change your tax designation.
It isn’t always black and white when you’re wondering if you need an EIN as a single-member LLC owner, but it’s better to be safe than sorry by securing an EIN for any future circumstances. Request your EIN through Bizee, and you’ll have it ready to go and waiting in your dashboard within 24 hours.
Wendi is a freelance writer based in Indianapolis, IN, with over a decade of experience writing for a variety of industries from healthcare to manufacturing to nonprofit. When she isn't working on solutions for her clients, she can be found spending time with her kids and husband, working in the garden or doing more writing (of the fiction variety). Read more
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