Does a Single-Member LLC Need an EIN?

EIN barcodeAn Employer Identification Number, or EIN, is a unique tax id number assigned to businesses so that the IRS may keep track of them. In this way, the EIN is very similar to your Social Security Number. If an LLC has more than one owner — or “member” — it must apply for an EIN. Additionally, if the LLC has any employees other than the single owner, it must apply for an EIN.

If, however, your single-member LLC has no employees, you may be able to use your personal SSN as your LLC’s unique identification number for the purpose of filing taxes, applying for bank loans, or conducting business with other companies. The IRS has no special tax classification for LLCs; rather, an LLC is viewed as either a corporation, partnership, or disregarded entity. Unless you intentionally elect to be taxed as another type of entity, the IRS will treat your single-member LLC as a disregarded entity.

Disregarded entities do not need an EIN and are taxed the same way as sole-proprietorships; that is, the LLC’s income passes through to the single member’s personal income tax return.

Some single-member LLC owners may be uncomfortable using their SSNs for business filings, however, and so an EIN can help create an additional line of separation between the owner and the company. Additionally, some banking institutions or states will require that all LLCs possess an EIN even through the IRS does not demand one. Fortunately, applying for an EIN is quick and free, and it is often advantageous for any LLC to apply for an EIN even if it does not need one.