Getting an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) is one of the crucial steps in launching a business. A business’s EIN serves as a distinctive identity for taxation. However, a lot of business owners are uncertain if they must add LLC to their EIN number or not. This page will cover the response to this query as well as information on connected subjects.
The short answer to the question of whether your EIN number has to include LLC is no. Regardless of the legal makeup of your company, an EIN serves as a distinctive identification number. You will use the same EIN for tax purposes regardless of whether your company is a corporation, LLC, partnership, or sole proprietorship. You will be required to supply details about your business, including its legal structure, when you apply for an EIN. Which tax forms your company needs to file are determined using this data.
While getting an LLC for your company has no drawbacks, there may be some negative effects to take into account. The cost of creating and keeping an LLC is one of its key drawbacks. Furthermore, depending on the nature of the firm and its objectives, an LLC may not be the ideal option for every organization. For instance, a corporation can be a preferable option if you intend to go public with your company in the future.
Yes, a single person may hold an LLC. This type of LLC, also referred to as a single-member LLC, is preferred by many small business owners. A single-member LLC’s primary benefit is that it shields the owner’s personal assets from liabilities. A single-member LLC can also elect to be taxed as a sole proprietorship, which streamlines the need to file taxes.
An LLC cannot be obtained for free. However, there are internet firms that can assist you in forming an LLC for a price, and certain states offer low-cost or reduced-fee LLC formation. It is crucial to remember that even if you create an LLC on your own, there will be continuous expenses for keeping the LLC in good standing, such as state fees and taxes.
Depending on how you apply, the time it takes for an EIN to become active can change. You can get your EIN right away if you apply online. Your EIN may not become active for up to four weeks if you submit your application by mail. After launching your firm, it is crucial to get an EIN as quickly as possible because it is necessary for numerous commercial operations, including creating a business bank account and recruiting staff.
Since your EIN provides a distinctive identifier for your firm regardless of its legal structure, it is not required to add LLC to it. While creating an LLC may have some drawbacks, it can insulate your personal assets from liability. A single-member LLC is another common option for small business owners. Even if there are no free LLCs, there are affordable solutions. Finally, depending on how you apply, the period it takes for an EIN to become active can change.