When you’re setting up a corporation or LLC, you’ll have to meet different requirements, including an EIN. Unfortunately, there’s far too much information and confusion about the EIN cost nowadays which makes it difficult to know where to start.
To help your business, our experts will be walking you through the EIN number cost and everything you need to know in this guide.
How Much Does an EIN Cost?
What is an EIN?
EIN, short for Employer’s Identification Number, is also known as FEIN (Federal Employer’s Identification Number). It is a unique 9-digit number that the IRS assigns to businesses in the United States. It is used to identify your business entity and file your taxes.
Will You Need an EIN?
You should note that it isn’t every business required to obtain an EIN, for starters. You’ll only need an Employer’s Identification Number if:
- You have employees
- You run a Limited Liability Company, a partnership, or a corporation
- Withhold taxes on salaries and wages of members of your company.
Technically speaking, if you run a single-member Limited Liability Company or a sole proprietorship, you do not need an EIN. This is because, in both business models, only one person runs the business. Therefore, the government can simply identify your business with your Social Security Number instead of an EIN.
Of course, you can still go ahead to acquire the identification number. It’ll allow you to do all the things that the natural holders use it for. But, if you don’t acquire one, there are no penalties for you.
However, if you do decide to get it, the ID number will be useful to you in the following ways:
- You can use it to open a bank account for your business. An alternative to this is using your SSN if the bank requests it.
- You can use it to apply for business permits and licenses peculiar to your industry. Most licensers would request your EIN at some point in the permit provision process.
- You can use it to file your federal and state tax returns. In this case, the EIN will serve as your business identifier.
- You can use it to hire employees. In this case, the EIN would serve as an account number that would be useful for tracking income tax withholdings, payroll taxes, and unemployment.
Now, if you meet any of the requirements for an EIN, you should know that it also entails a few consequences. Apart from the possible legal implications, you’ll have to combine your personal funds with your business funds. And this opens you up to increased liability.
In a nutshell, your assets would be at greater risk if anything goes wrong with your business. The only way to avoid this potential challenge is to create a separate account for your business. That way, everything’s separate and low-risk.
Costs of Filing for an EIN
To identify the breakdown of costs for an EIN, here are the two ways you can acquire your EIN:
Getting it Yourself
If you’re wondering what the EIN number cost is, you should know that the Internal Revenue Service does it at no extra cost to you. However, you must have a Social Security Number if you’re the one filing for the EIN. Alternately, you should have an Individual Tax Identification Number.
With either of these documents, you don’t need to worry about extra charges while trying to get your EIN. However, if you do not have them, the process becomes significantly more complicated. First of all, you would not be able to apply for your EIN on the internet. Second, you might have to visit the IRS physically so that they can walk you through the necessary procedures.
Getting it With an LLC Service Company
While acquiring an EIN yourself is free, it can also be quite stressful. It’s even more tedious when you have several other tasks that are pending. For business owners who might find the process tiring, there are LLC and corporation service companies.
These companies help to handle several things in your business, from operating agreements to registered agent services. They are also capable of filing your Employer’s Identification Number.
If you decide to work with them, the EIN number will entail costs. However, an advantage of this is that they will get everything done at no extra stress or pressure to you. You should keep in mind that there is no standard price for acquiring an EIN with LLC service companies.
For most companies, you’ll have to buy a full subscription package. This can cost anything from $30 to $280. However, the EIN filing will be included in the package. For other companies, you’ll have to get the EIN as an add-on after subscribing to the main package.
Duration of Processing and Other Requirements
Our team emphasizes that filing for an EIN isn’t something you can do instantaneously. According to the IRS, the process can take up to four weeks to complete.
If you’re working with a corporation or LLC service company, they might present an option to pay extra for a faster filing process. Before proceeding, you should understand what this entails. The extra fee you pay them would ensure that they send your filing request to the IRS earlier than other clients. It doesn’t necessarily mean that they’ll get your 9-digit EIN in the blink of an eye .
However, if you want to ensure things don’t take longer than usual, you check a few things are in order first. Our team of experts have outlined them below for your convenience:
- Make sure that your application form contains every bit of information required of you. This will prevent them from sending it back for you to refill.
- Your principal state of business must be within the United States of America.
- You can only have one EIN for one responsible party every day.
- You must have a valid taxpayer ID number.
What is the fee for filing for an EIN number?
The fee for filing for an EIN number depends on how you acquire it. If you do it yourself, it’s free. However, if you working with an LLC service company, it will come at a cost that the company sets.
Is getting an EIN free?
Getting an EIN is free if you’re filing it yourself.
Do I need an EIN for a small business?
Yes, you need an EIN for a small business. But, that’s only if your business is a corporation, an LLC or a partnership.
The EIN number cost is free if you will be getting it yourself. But, our experts found that the numbers go higher if you plan to work with an LLC service. Before deciding on your next step, consider how much extra work you can handle vis-à-vis your current financial strength.