Question

I formed a new LLC. How do I get a Federal Employer ID number and identify my entity type for tax purposes?

Answer
Generally, a business needs a Federal Employer ID number (EIN) when it’s initially created. Applying online (irs.gov), by fax, by mail, or by telephone for an EIN is a free service offered by the Internal Revenue Service. The online EIN application is their preferred method, and is available for most entities.

When applying, you must indicate how the LLC will be treated for tax purposes. By default, if the LLC has one owner (member), it’s treated as a “disregarded entity” reported on the sole owner’s tax return. Alternatively, such LLC can make an affirmative election to be treated as a regular (“C”) corporation or, if eligible, an “S” corporation. An LLC with two or more members would have partnership status, unless it affirmatively elects to be treated as either a C or S corporation. An attorney can help identify the best tax treatment for your LLC and guide you through the process.