Employer Identification Number (aka EIN)
An Employer Identification Number (EIN) is a nine-digit number [similar to the Social Security Number (SSN)] that the IRS assigns to business entities, non-profit organizations and some other associations.
- It is also known as a Corporate Taxpayer Id Number or a Federal Employee Identification Number (FEIN).
- This unique nine-digit number is used by the Internal Revenue Service (IRS) to identify a business operating in the United States.
- An EIN is not an authorization to live or work in the United States and is not presentable as a form of personal identification.
Who needs one?
- All banks will require your company to provide an Employer Identification Number (EIN) to open a bank account in the US.
- Your company would also be required to obtain an EIN if you will have wage earning employees in the US.
- If you will be opening your bank account outside the US, and will not have employees in the United States, it may not be necessary for your company to obtain an EIN.
How do I obtain an EIN?
US Citizens and Resident Aliens
- For companies headed by a US Citizen (or a Resident Alien who already has a SSN or ITIN) DBI can electronically file an application for an EIN with the IRS and obtain the EIN for your new Delaware Corporation or Delaware LLC.
- This process would be initiated after the new company is registered with the Delaware Division of Corporations and before the bank account is opened.
- The process can usually be completed in less than 24 hours, often as quickly as 1-2 hours! (Some additional information may be requested).
- If the company is a subsidiary, it may provide the EIN of its parent company for application purposes.
- If the principal does not have a SSN or an ITIN, and the business will not have a physical business location inside the US (other than a Virtual Office), DBI can still help your Delaware company obtain an EIN, but the process will take longer, usually 3-5 business days.
- If you order EIN Obtainment Service for Non-Resident Non-Citizens DBI will prepare the application form with the information you provide and will file the application form with the IRS on your behalf.
Frequently Asked Questions
My company won't have any employees, can I still get an EIN?
- Although the name may seem misleading, you are not required to have employees to apply for an EIN.
- If you need an EIN for banking purposes you will be assigned an EIN even if you have no employees.
If I apply for an EIN, does that mean I have to start paying US Federal Income Taxes?
- Obtaining an EIN is not a factor taken into consideration when determining if you will owe US Federal Income Taxes.
- US citizens who have a One-Member LLC or an S-Corporation will file any profits or losses on their personal income tax return.
- C-Corporations with US-Source Income will file a Corporate Income Tax Return.
- Non-Resident Non-US citizens who have no US-Source Income will not owe US Federal Income Tax.
- If you are not sure if you will owe Corporate or Personal Income Tax we recommend that you consult a tax advisor.
Can I get an EIN for each Separate Series in my Series LLC?
- IRS Private Letter Ruling 200803004 established that each Separate Series in a Series LLC may obtain its own separate EIN.
- It is best practice for each Separate Series to have its own bank account or brokerage account to satisfy the below criteria for establishing separate liability:
- Each Separate Series must maintain its own separate and distinct records.
- The assets of each Separate Series must be held separately in the name of the sub-company and in the sub-company’s own account.
- Therefore, if a Separate Series will hold assets in a bank account or brokerage account it will be necessary to obtain an EIN for that Series.
What is the deadline to apply for an EIN?
- If you will have wage earning employees in the US it is best to obtain your EIN before the first payroll runs.
- If you will be using a commercial payroll manager they may request that you apply sooner.
- If you will not have employees or do not have any yet, and have no immediate plans to open a bank account, you may wait until the need arises.
- IMPORTANT: If you intend to elect S-Corporation Status for your corporation or C-Corporation Status for your LLC there is a deadline to file the appropriate election form.
- If you wish to obtain tax-exempt status for your non-profit organization you must also file the necessary applications.
- Obtaining an EIN does not afford your company S-Status, C-Status or Tax Exempt Status and does not take the place of filing the necessary election form.
What is a Social Security Number (SSN, SS#)?
- A Social Security Number is a nine-digit number assigned to US Citizens and to non-citizens authorized to work in the United States by the Department of Homeland Security.
- An SSN is not the same as an EIN or an ITIN. These are three different types of Tax Identification Number.
What is an ITIN?
- An Individual Taxpayer Identification Number (ITIN) is a nine-digit identification number that the IRS assigns to resident and non-resident aliens who will owe Income Tax to the United States as individuals.
- An ITIN is not an authorization to work in the United States.
- An ITIN is not the same as an EIN or an SSN. These are three different types of Tax Identification Number.
What is a Resident Alien?
- For the purposes of this discussion a Resident Alien is a person who holds a Green Card or Visa permitting them to live in the United States.
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