Does an LLC need to get a Federal Tax ID number Employer ID EIN?

The IRS will let you use your social security number instead of a federal tax identification number only in the case you are the only owner and you have no employees or excise tax liability. 

HOWEVER, the STATE or THE BANK may require you to get a federal tax ID for your LLC.

• The state wants you to get one because the state is the creator of the LLC and it is usually for STATE tax purposes that the state wants you to get an EIN.
• The bank wants you to get a federal tax id EIN because they want to identify and separate your LLC account from your personal bank account, which is opened under your social security number.

What is an LLC?

• Originated in the late 1970s in Wyoming
• LLC offers the tax advantages of a partnership along with the liability protection of a corporation.
• LLC does not require members, to comply with the formalities of a corporation.

So, the question s:  is an LLC always the best choice?

The word "always" does not sound good to lawyers.

Well, first, states make a lot  of money from state created corporate entities such as LLCs.  Thus, they make it easy even for one member LLC to be created.

Changes affecting Single Member LLCs with Employees

After January 1, 2009, single member/single owner LLCs that have not elected to be treated as corporations, the LLC, not its single owner, will be responsible for filing and paying all employment taxes on wages paid on or after January 1, 2009. These regulations also state that for certain excise taxes, the LLC, not its single owner, will be responsible for liabilities imposed and actions first required or permitted in periods beginning on or after January 1, 2008.  In such case, if the single owner used his social security to report employment taxes, now a federal tax  identification employer number must be issued for the LLC.

If the primary name on the account is the name of the single owner, such as Bob Jones, a new EIN will be required.
But even if the primary name on the account is the name of the single owner, such as Bob Jones, and the second name line is Jones Painting (which was organized as an LLC under state law), a new EIN is required.

If the primary name on the account  is Jones Painting (which was organized as an LLC under state law), a new EIN is required.

Does a Limited Liability Company (LLC) Need a Federal Tax ID EIN

As far as the IRS is concerned, an LLC is an state created corporate business entity.

Here is  the steps to form an LLC . You should also read  forming an LLC for information  applicable to your state.

The federal government's IRS recognizes only the following business taxpayers:

• corporation,
• partnership, or
• disregarded as an entity separate from its owner, referred to as a “disregarded entity.”  

As a result an LLC is always classified by the IRS as one of these types of business taxable entities. If an LLC is treated as a  “disregarded entity” and it is owned by an individual, for IRS and tax purposes, it is treated as a sole proprietor. On the other hand, if the “disregarded entity” is owned any other entity, such as a partnership or corporation, it is treated as a branch or division of its owner, namely the partnership or corporation. 

 LLC is the the preferable corporate entity when it comes to choosing an entity for small businesses. In some cases, however, an LLC is at a disadvantage compared to an S Corporation.

1. Business name  availability.

• Checking the availability of a name for your small business, trademark law and choosing a name.

• California law requires an LLC name to include the suffix "limited liability company" or the abbreviation "LLC" or "L.L.C." as the last words in the name. The words "limited" and "company" may be abbreviated to "Ltd." and "Co." Additionally, your business name may not be the same as, or deceptively similar to, that of any other California LLC or any foreign LLC registered to do business in the state.

• Consider registering a  trademark.

2. File articles of organization with the Secretary of State.

• Our filing fee is $119

Bottom line, get a federal tax ID number for your LLC because no matter what you will need it either from the state or the bank or the IRS.
 

3. Execute an operating agreement.

• California requires an operating agreement in order to form an LLC. See Cal. Corp. Code. § 17050(a). Operating Agreement

4. File a Statement of Information

• Owners of a LLC need to file a LLC Statement of Information

Question:  What are the advantages of an LLC over an S corporation?     

The fee is $199 but it could change.