Most LLCs need one. But the answer depends on how many owners your LLC has, whether it has employees, and how it's taxed.
There's one common case where the IRS doesn't require an EIN at all, even though most banks will still ask for one anyway. Here's when an EIN is required, when it's optional, and why "optional" often doesn't mean "skippable."
What is an EIN and why it matters
An EIN, or Employer Identification Number, is the nine-digit identifier the IRS assigns to a business. Think of it as a Social Security number for an entity instead of a person.
It's how the IRS tracks your business for tax filings. It's also usually what a bank, payroll provider, or vendor asks for before they'll open an account or set up payments in your business's name.
Whether your LLC needs one depends on how it's structured. The IRS spells out exactly who's required, and it isn't left to judgment.
Get it wrong in either direction, apply for one you don't need, or skip one you do, and it can slow down your first tax filing or your first attempt to open a business bank account.
When an LLC needs an EIN
Multi-member LLCs always need one
Per the IRS's Limited Liability Company (LLC) page, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes "unless it files Form 8832 and affirmatively elects to be treated as a corporation."
Partnerships sit on the IRS's general list of entities required to have an EIN, so if your LLC has more than one member, this isn't a judgment call. Get an EIN before your first tax filing.
Single-member LLCs with employees
By default, the IRS treats a single-member LLC as a "disregarded entity" for income tax purposes. The owner reports business income directly on their personal return.
That disregard doesn't extend to employment taxes. Per the IRS's Single-Member LLCs page, an LLC "will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below."
The moment your single-member LLC has even one employee, the IRS requires it to report and pay employment taxes under its own name and EIN, not the owner's Social Security number.
Single-member LLCs with excise tax obligations
If your LLC has to file federal excise tax forms (Form 720, 730, 2290, or 11-C) or register for excise tax activities on Form 637, it needs an EIN. The logic mirrors the employment tax rule above. Excise tax filings run through the entity itself, even for an LLC that's otherwise disregarded for income tax purposes.
Single-member LLCs that elect corporate or S-corp tax treatment
An LLC can choose to be taxed as a corporation instead of its default classification by filing Form 8832 (and, for S-corp status, the follow-on election after that).
Once that election takes effect, the IRS treats the business as a corporation for tax purposes, and corporations are squarely on the list of entities that need an EIN. If your LLC has never had one and is making this election, get the EIN first.
That's a separate question from whether an LLC that already has an EIN needs a new one when it changes its tax election. It doesn't.
Per the IRS's When to Get a New EIN page, an LLC doesn't need a new EIN when it changes its tax election to a corporation or an S corporation. The requirement above applies specifically to an LLC that has never had an EIN and is now being taxed as a corporation for the first time.
LLC situation | Needs an EIN? | Why |
|---|---|---|
Multi-member LLC (any number of owners over one) | Yes, always | Taxed as a partnership by default; partnerships require an EIN |
Single-member LLC with employees | Yes | Employment tax filings must use the LLC's own EIN |
Single-member LLC with excise tax obligations | Yes | Excise tax forms and registrations require the LLC's own EIN |
Single-member LLC electing corporate or S-corp tax treatment | Yes, if it doesn't already have one | Once taxed as a corporation, it's on the general EIN-required list |
Single-member LLC, disregarded entity, no employees, no excise tax | Technically optional | IRS doesn't require one, but most banks do to open a business account |
When a single-member LLC can skip the EIN
If your LLC has exactly one owner, no employees, no excise tax obligations, and is taxed as a disregarded entity (the IRS's default classification), you technically don't need an EIN. You can use your own Social Security number for federal tax filing purposes instead.
In practice, most banks won't open a business checking account on a Social Security number alone, even for an LLC that's fully entitled to skip the EIN under IRS rules.
That's a bank policy decision, not an IRS requirement, and it varies by institution. But it's common enough that most single-member LLC owners end up applying for an EIN anyway, not because the IRS demands it, but because their bank does.
Can you open a business bank account without an EIN?
Usually not, at least not the account most founders want. Banks generally treat an EIN as a baseline account-opening requirement, separate and apart from whatever the IRS itself requires of your specific LLC.
Rho works the same way in one respect and differently in another. Applying with just your SS-4 (the EIN application itself) in hand is enough to get a Rho account open; you don't have to wait for the EIN letter to land before you start.
What you can't do is move money, send a payment, or spend on a card until the EIN itself is issued and attached to the account. Account opening and EIN processing run in parallel, not one after the other, but transacting still waits on the EIN either way.
Other FAQs about EINs and LLCs
Should I get an EIN or an LLC first?
Form your LLC first. An EIN identifies an existing entity for tax purposes, so the IRS and most states expect your LLC to be legally formed before you apply for an EIN tied to it.
What's the difference between an LLC and an EIN?
An LLC is a legal business structure you form at the state level. An EIN is a federal tax ID number the IRS assigns to that business once it exists. One is what your business legally is; the other is how the IRS tracks it for tax purposes.
Is there a downside to getting an EIN?
Not much of one. Applying is free directly through the IRS, takes a few minutes online, and doesn't obligate you to anything you weren't already going to do. If there's a reason to hold off, it's simply that you don't need one yet, not that having one costs you something.
What happens if I get an EIN and never use it?
An EIN that goes unused just sits on file. The IRS doesn't cancel it, expire it, or reassign it, and there's no penalty for requesting one you end up not needing. If your business never launches or you close it down, the EIN stays on file with the IRS but requires no further action from you.
Should I get an EIN as a sole proprietor or as an LLC?
The underlying trigger conditions are the same either way. A sole proprietor with no employees and no excise tax obligations can typically use their own Social Security number, just like a single-member disregarded-entity LLC can. Forming an LLC doesn't change your EIN requirement by itself. What changes it is your employee count, your excise tax status, or a corporate tax election, regardless of which structure you're operating under.
Is an EIN the same as a Tax ID Number (TIN)?
Close, but not quite. An EIN is one specific type of TIN, and TIN is the broader IRS category that also covers Social Security numbers and individual taxpayer ID numbers. For a closer look at where an EIN fits relative to other tax ID types, see TIN vs EIN.
The short version
Most LLCs need an EIN. A multi-member LLC needs one without exception, and a single-member LLC needs one the moment it hires an employee, takes on an excise tax obligation, or elects corporate tax treatment.
The one real carve-out is a single-member LLC with no employees, taxed as a disregarded entity. The IRS doesn't require an EIN there, though most banks will ask for one anyway before they'll open a business account.
If you're not sure whether your LLC already has one, look up or retrieve your EIN before you apply for a new one. Once you've got it, here's how a business credit card with just an EIN actually works.
And if you're ready to open a business account, most banks, Rho included, will ask for it first.
FAQs
Form your LLC first. An EIN identifies an existing entity for tax purposes, so the IRS and most states expect your LLC to be legally formed before you apply for an EIN tied to it.
An LLC is a legal business structure you form at the state level. An EIN is a federal tax ID number the IRS assigns to that business once it exists. One is what your business legally is; the other is how the IRS tracks it for tax purposes.
Not much of one. Applying is free directly through the IRS, takes a few minutes online, and doesn't obligate you to anything you weren't already going to do. If there's a reason to hold off, it's simply that you don't need one yet, not that having one costs you something.
Nothing happens automatically. The IRS doesn't cancel, expire, or reassign an unused EIN, and there's no penalty for requesting one you end up not needing. If your business never launches or you close it down, the EIN stays on file with the IRS but requires no further action from you.
The underlying trigger conditions are the same either way. A sole proprietor with no employees and no excise tax obligations can typically use their own Social Security number, just like a single-member disregarded-entity LLC can. Forming an LLC doesn't change your EIN requirement by itself. What changes it is your employee count, your excise tax status, or a corporate tax election, regardless of which structure you're operating under.
Not exactly. An EIN is one specific type of TIN. TIN is the broader IRS category that also covers Social Security numbers and individual taxpayer ID numbers. For a closer look at where an EIN fits relative to other tax ID types, see TIN vs EIN.