Are Any States Excluded From the Necessity of Obtaining an EIN?

There are no states that are excluded from the necessity of obtaining an employer identification number, which is also known as an EIN. However, some states do require an additional state-issued tax ID to pay special state taxes or state employment taxes.

The necessity of obtaining an EIN is based on certain qualifications related to the characteristics of the business entity. Most business entities must obtain an EIN. Here are the types of businesses that require an EIN.

LLCs

LLCs, except for those with no employees or those that operate as a sole proprietorship, must obtain an EIN. Here are the different types of LLCs that do require an EIN:

  • Single-member with employees—If an LLC with one member plans to hire employees in the next year, two EINs might be required. The IRS will assign one for the owner and one for the LLC. Any money from the LLC that goes to the one member has to be filed with the owner’s EIN, and the employment taxes filed with the LLC’s EIN. In situations in which a sole proprietor wants to switch to a LLC and already has an EIN, that individual may have to apply for a new EIN if they are planning to hire employees.
  • Multiple-member—With or without employees, LLCs with multiple members require an EIN.
  • LLCs taxed like corporations—Some LLCs choose to be taxed like corporations. In this case, an EIN is required.

Partnerships

An EIN is required for both limited partnerships and general partnerships. This includes partnerships with no non-partner employees.

Corporations

Both C Corporations and S Corporations must apply for an EIN. C Corporations are ones in which the owners are only taxed on salaries, bonuses and dividends, not on business profits. In S Corporations, the owners are taxed individually.

Sole Proprietorship with Employees

If an individual is a sole proprietor who plans on hiring employees in the next 12 months or has already hired employees, they must apply for an EIN.

Business owners can apply for an EIN online, by phone or mail through the IRS. Click here to start the process of filing for your EIN online.

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