What is EIN?
Although EIN is the abbreviation for Employer Identification Number, it does not mean that you have to have employees. EIN, also known as a Federal Tax Identification Number (FTIN), or Federal Employer Identification Number (FEIN), is like a Social Security number (SSN) for your business. The unique EIN number allows the Internal Revenue Service (IRS) to identify businesses for tax reporting. We can say that EIN is just a Taxpayer Identification Number (TIN) that identifies your LLC with the IRS.
2) Differences and Similarities Between EIN and SSN
EIN’s have a lot in common with SSNs. They are a unique number that is nine digits long and as mentioned businesses are legally required to identify their companies with either an SSN or EIN and many choose to use their EIN. To differentiate an SSN (123-45-6789) from an EIN, there are 2 digits followed by a hyphen and then 7 more digits (ex: 12-3456789). If you own and operate a small business with no other employees, it is your option to elect to use your SSN as the TIN for your business. On the other hand, if you have employees, an EIN becomes necessary.
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3) Do I Need an EIN?
The IRS has made it very clear on their website who needs an EIN. In short, if you run a business with or without employees, if you run your business as a corporation or partnership, if you file any of the following tax returns: Employment, Consumption of Alcohol, Tobacco and Firearms or withholding tax on income other than wages paid to a non-resident alien, you are going to need an EIN.
4) How to Get an EIN?
We help you to obtain an EIN from the IRS for your company at a very affordable price. With this easy and fast service, you will avoid filling confusing IRS forms and procedures also benefit from our professional customer support. You can review our fees for the EIN application service.
5) Required Documents for EIN Application and the Process
After receiving the state-approved and stamped Certificate of Formation which you have established for your company in the USA, the next step is to obtain an EIN from the IRS. In order to get an EIN, there is a bunch of information that will be requested from you.
5.1) LLC Company Name
This is the first step of applying for an EIN, defining your LLC company name, it is the full name of the company sent to the state office where your company is registered in the USA. The name must have “LLC” at the end.
5.2) To Whom Notifications Should Go
Secondly, IRS wants to know who to contact for the EIN process, and that person can reside anywhere in the world. For example, LLC company member, manager, accountant, or attorney, therefore you need to indicate to whom the notifications should go.
5.3) The Postal Address of the LLC Company
The mailing address to which tax correspondence does not have to be in the United States either for the EIN purpose.
5.4) Country or State where the Company is Located
IRS needs to know for sure where the company will be for EIN purposes. The company’s location can be anywhere in the world and does not need to be in the United States
5.5) Name and Social Security Number of the Responsible Party
Typically this person is one of the LLC members. You should remember that a member of the company does not need to be a US resident or even a US citizen in order to apply for an EIN. Members can reside anywhere in the world. If the member does not have a Social Security Number, this is acceptable. So, Individuals should use if there is a Social Security Number (SSN).
5.6) How the LLC Company will be Taxed
This step may have significant tax implications for the LLC. Most of the time LLCs with more than one member are automatically classified as a partnership. If the company has a sole member, the classification of the company is a sole proprietorship for federal tax purposes. This means that the assets stay preserved in terms of LLC expenses. But, the taxation will not change for multi-partner or sole proprietor companies.
When filing and preparing federal tax return forms with the IRS, you should pay attention to your tax classification. Federal tax forms are different for multi-member and sole proprietor LLCs. IRS can tax an LLC as either an S corporation or a C corporation. It is a good idea to consult with a tax professional for the benefits and implications of holding elections. For example, you may consider having either an S corporation (S-Corp) or a C corporation (C-Corp).
5.7) Closing Month of the Accounting Year
Our clients often choose December as the month unless the tax accountant specifically selects another month for simplification purposes during the EIN application. It is also highly common to choose December as the closing month of the accounting year.
5.8) Applicant’s Brief Job Description
Present to IRS brief information and details about what your LLC will do. If you prefer construction as a nature of the business, you should make a brief description of the activities for your EIN.
The process of obtaining an Employer Identification Number (EIN) for your LLC may have been a bit confusing. We offer an easy and short Employer Identification Number service to your new or established LLC.
Footnote: EIN is given by the Internal Revenue Service is a number and used by companies, businesses, individuals