Does my new limited liability company need a Federal Employer Identification Number?

Congratulations! You’re starting a new venture and you’ve already registered your Indiana limited liability company (“LLC”); now what? First, you need to make sure the proper documentation is in place for the operations of the company. For LLCs, that is typically in the form of an Operating Agreement. If you have questions regarding Operating Agreements, this blog post explains why your business needs to have the correct business formation documents.

Once your formation documentation is completed, your new company will likely need a bank account or loan to begin business operations. One of the most common questions that attorneys get when helping clients start their new businesses is if they need an Employer Identification Number (“EIN”). This number is often requested by banks or loan officers.

What is an EIN?

EINs are also known as Federal Employer Identification Numbers or Federal Tax Identification Numbers. These numbers are unique nine-digit numbers assigned by the Internal Revenue Service (the “IRS”) to business entities. An EIN is like a social security number for your business: having one allows the IRS to track entities for tax purposes, much like a social security number is used to track your personal earnings, taxes, and employment.

When is an EIN required?

If you are the sole member/owner of your LLC and will not have any employees, you might not need an EIN. These types of LLCs, with one owner and no employees, are considered “disregarded entities” for tax tracking purposes. These LLCs are tracked under the owner’s social security number.

However, if there is more than one member/owner of the LLC, or if you plan to hire any employees, an EIN will be required. EINs can be obtained online through the IRS website, and can be issued immediately upon completion of the application. More information about the application process can be found here.

How is an EIN used?

Once the EIN is issued, it will be linked to your LLC. It will then be used to open bank accounts, obtain loans and other types of financing, and to file annual and employment taxes. The EIN will also be linked to a “responsible party,” which is the person who ultimately owns or controls the LLC. This person will be held responsible for any filings related to the EIN.

More questions?

If you have more questions about this process, contact the experienced business law attorneys at McNeelyLaw LLP. We can obtain an EIN on your behalf and are here to help your business succeed. We regularly work with a variety of businesses, from small to large, and from start-up to multi-generational. Call our office at 317-825-5110 to speak with an attorney about your business goals.

Please note that this post only discusses a limited liability company’s use of an EIN. Different rules apply for corporations, partnerships, or other business entities.

This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.