Domestic EIN in Texas – How to Obtain EIN in Texas (original) (raw)

get an ein

An Employer Identification Number (EIN) also known as a Federal Tax Identification Number is an essential identifier issued by the Internal Revenue Service (IRS) for all businesses in Texas. A nine-digit number serves as a unique identification for businesses enabling the IRS to track tax returns and payments among other financial transactions.

Texas, also known as The Lone Star State, has immense opportunities for businesses. Be it an LLC (Limited Liability Company), sole proprietorship, partnership, or corporation – every business, located in Texas, must obtain the EIN to conduct business in Texas. This article comprehensively discusses obtaining domestic EIN in Texas; its purpose; application process; requirements and related regulations.

What is a Domestic EIN in Texas?

In Texas, the process of obtaining an EIN for your LLC is relatively straightforward. However, there are certain requirements and steps that you need to follow to ensure compliance with state and federal regulations. In this article, we’ll cover the following topics:

What is an EIN?
When do LLCs in Texas need an EIN?
How to obtain an EIN for your LLC in Texas
Benefits of having an EIN for your LLC
Common mistakes to avoid when applying for an EIN
Frequently Asked Questions (FAQs)

A domestic EIN in Texas refers to an Employer Identification Number given to enterprises that operate within Texas or the United States or any of its territories. It is a distinct number sequence used as federal tax ID which helps IRS identify accurately and monitor businesses’ tax obligations. Unlike individual Social Security Numbers (SSNs), which are assigned to people alone in Texas, EINs are designed specifically for organizational bodies.

If you’re starting an LLC in Texas, you must obtain EIN for server purposes. Irrespective of the LLC’s management structure, EIN is mandatory for all types of LLCs, Corporations, Sole proprietorships, and other types of businesses.

The Purpose of a Domestic EIN

The main objective of having this type of identification among companies based in America can be summed up as follows: facilitating taxation administration and reporting. It becomes obligatory in various entrepreneurial activities like;

Hiring employees – If your company in Texas hires workers then you must get one so that it can report payroll taxes plus remit them besides adhering to different employment-related laws in Texas.
Filing business tax returns – Corporations together with partnerships among other specified types of organizations must have an E.I.N when filing their federal income tax return including employment taxes as well excise duty.
Establishment Of Business Bank Accounts: Most banking institutions require firms to produce an employer identification number while opening accounts for their enterprises since it aids in verifying legality and distinguishing separate identity from personal finances.
Application For Business Licenses And Permits: The local government of Texas might demand the presentation of an employer identification number by applicants seeking various licenses and permits like sales tax permits, zoning permits, or even business licenses.
Applying For Business Credit: Lenders and Credit providers often need an Employer Identification Number (EIN) to create credit profiles for businesses to evaluate their creditworthiness. In Texas, there are many banks that provide
Withholding Taxes on Certain Payments: Non-resident aliens receiving income subject to withholding tax should provide you with your E.I.N. while those operating Keogh plans must also be furnished with it since such pensions are deferred taxes.
Identifying Trusts, Estates, and Non-Profit Organizations: A trust, estate, real estate mortgage investment conduit (REMIC), or non-profit organization farmer’s cooperative plan administrator should get one when reporting taxes or for identification purposes.

Does an EIN serve as a Texas Tax ID Number?

No, it doesn’t mean that EIN serves the same purpose as a Texas Tax ID Number. An EIN is a federal tax identification number issued by the IRS while Texas Tax ID Number is given out by the state tax office for state taxation purposes.

Who Needs a Domestic EIN in Texas?

The Internal Revenue Service has laid down clear-cut guidelines on which businesses should possess a domestic EIN in Texas. Generally, the following entities must have an EIN:

Corporations: Every corporation whether C corporation, S corporation, or personal service corporation needs to get this number.
Partnerships: Any partnership including general partnership limited partnership limited liability partnership requires having an employer identification number according to IRS rules.
Limited Liability Companies (LLCs): Most LLCs unless they are single-member LLCs that are disregarded entities for tax purposes will be required by law to obtain an E.I.N.
Trust and Estates: Except for some grantor-owned revocable trusts all other types of trusts as well as estates must acquire one.
Non-Profit Organizations: All nonprofit organizations – churches, charities among other tax-exempt bodies have no choice but to apply for this identifier.
Organizations of the Government: Some government agencies and organizations might need an EIN for specific reasons, such as employee payment or reporting tax-related information.
Companies with Employees: Any business entity that hires employees must have an EIN regardless of its legal structure to comply with employment tax laws.
Businesses Required to File Certain Tax Returns: Businesses filing employment tax returns; excise tax returns; or alcohol, tobacco, and firearms tax returns must obtain an EIN.

Even if your business is not required to have one, getting an EIN may still be beneficial. For example, sole proprietors and single-member LLCs without employees can opt to use an EIN instead of their personal Social Security Number for added privacy and to establish a separate business identity.

For single-member LLCs in Texas that are treated as disregarded entities for tax purposes, you can use your SSN for federal taxes. Nevertheless, it is usually advisable to get an EIN so that personal and business accounts can be kept separate, credibility established and protection from identity theft enhanced.

When Do LLCs in Texas Need an EIN?

In Texas, the requirement for an LLC to obtain an EIN depends on several factors, including the number of members and the taxation structure of the LLC. Here are the general guidelines:

Single-Member LLCs

Single-member LLCs in Texas are not required to obtain an EIN for federal tax purposes if they are treated as a “disregarded entity” for tax purposes. This means that the LLC is not considered a separate entity from its owner, and the owner reports the LLC’s income and expenses on their personal tax return using their Social Security Number (SSN). Also read: How to start a single-member LLC in Texas

However, even if it’s not mandatory, it is generally recommended for single-member LLCs in Texas to obtain an EIN for the following reasons:

entity

Opening a business bank account (most banks require an EIN for business accounts)
Establishing business credit and building a credit history separate from the owner’s personal credit
Protecting against identity theft by using the EIN instead of the owner’s SSN for business transactions
Maintaining a clear separation between personal and business finances
Complying with certain Texas tax and licensing requirements

Multi-Member LLCs

Multi-member LLCs in Texas are required to obtain an EIN regardless of their taxation structure. This is because multi-member LLCs are considered separate legal entities from their owners, and they must file their own tax returns using an EIN.

Additionally, LLCs in Texas that choose to be taxed as corporations (either C-corporation or S-corporation) must obtain an EIN, even if they are single-member LLCs.

How to Apply for a Domestic EIN

Applying for a domestic EIN is relatively easy, and there are several convenient methods provided by the IRS. Here’s how it works:

Online Application

The easiest way of applying for EIN in Texas is through the IRS’s online application system since it’s entirely paperless. This method is available only if the principal business/office or agency/legal residence is located within the United States (including its territories). To apply online:

Go to the EIN Online Application page on IRS website.
Fill out all necessary information on the form which includes the legal name of your business; the type of organization/entity; a reason why you’re applying among others; and personal details about the responsible party like SSN/ITIN etc.
You have to complete this application in one sitting because there’s no option for saving it midway through filling up later.
Once submitted & validated successfully – you’ll get instant approval along with an assigned EIN from the IRS.

Fax Application

Download Form SS-4, Application for Employer Identification Number; fill it out completely.
Find out the fax number relevant to your state/territory from the “Where to File Your Taxes” section in SS-4 instructions.
Fax filled-in Form SS-4 to the designated number provided above based on where you’re filing from.
Usually, if a fax number is given – the IRS will reply within four working days including EIN details.

Mail Application

Download & fill up Form SS-4, Application for Employer Identification Number correctly without any mistakes or missing information.
Check the correct mailing address according to your location/state/territory from the same section mentioned above “Where to File Your Taxes” on SS-4 instructions.
Post completed Form SS-4 to the address provided above depending upon where it should be sent for processing purposes etcetera – always double-check this detail before posting!
It usually takes around 28 calendar days (about four weeks) to process time via mail route thus advisable to apply well ahead of time required for having EIN in hand.

Telephone Application (International Applicants)

For applicants outside the US/territories with principal business/office or agency abroad: Contact the IRS via phone call at 267-941-1099 (not toll-free) between Monday-Friday Eastern Time 6 AM – 11 PM & provide all information asked for in Form SS-4 over the phone call itself. Also read: How to get foreign EIN in Texas.

How long does it take to get an EIN after I apply?

If one applies online for an Employer Identification Number (EIN), they will receive it immediately upon their successful submission of the application. If fax, mail, or phone was used to apply then processing takes four to six weeks on average.

In order to complete the application, please provide the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the principal officer, general partner, grantor, owner, or trustor. This person or entity is known as the “responsible party” who controls, manages, or directs the applicant entity as well as exercises control over its assets and properties. The individual must be a natural person if not a government organization.

Third Party Designee

If you want another person such as an accountant or attorney to speak with the IRS about this application on your behalf, check the “Yes” box in the section indicated on Form SS-4. It is important to note that this authorization ends when EIN has been assigned thereby making it only valid for one specific application.

Obtaining an EIN for your LLC in Texas:

Getting an EIN for your LLC is a relatively straightforward process. These are generic steps before you obtain your EIN. It is recommended to hire a professional if you’re doing it for the first time. Here are the steps you need to follow:

Form your LLC

Before you can apply for an EIN, you must first form your LLC in Texas. This process typically involves filing the Certificate of Formation with the Secretary of State, P.O. Box 13697, Austin, TX 78711-3697 and paying the $300. It’s important to note that you should not apply for an EIN until your LLC has been officially formed and approved by the state.

Also, before you file the Certificate of Formation, make sure to appoint a Registered Agent for your LLC. Hiring a registered agent is mandatory for an LLC as the RA would be the point of contact on behalf of your LLC for any legal and official issues.

Can I apply for an EIN before forming my LLC?

No, you can’t apply for an EIN before you form your LLC but it is better to have your LLC approved by Texas Secretary of State first before applying for an EIN. If you apply for an EIN before forming the company this may result in some complications that may require obtaining a new one.

Gather the required information

To apply for an EIN in Texas, you’ll need to have the following information ready:

Legal name of your LLC in Texas (as listed on the Articles of Organization)
The mailing address and physical address of your LLC
Name and Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) of the responsible party (typically the LLC owner or manager)
Number of members in the LLC
Taxation structure (e.g., sole proprietorship, partnership, corporation)
Reason for applying for an EIN (e.g., starting a new business, hiring employees, changing ownership structure)

Choose your filing method

The next step is to choose the filing method. As mentioned above, there are several ways to apply for EIN. You can either choose online, by mail, fax, or through phone.

Submit your application

Once you have gathered the necessary information and chosen your filing method, follow the instructions provided by the IRS to submit your application. For the online application, the form will be submitted immediately. For the application by mail, it depends on the delivery of the mail to the office. It may take up to a few business days to receive the application sent by mail.

If you hire an LLC formation service, such as ZenBusiness, you might not need to worry about submitting your EIN application. They do that on your behalf. ZenBusiness is one of the top-rated business formation services that offer LLC formation at $0 in Texas. However, there is a minimum charge to obtain EIN through ZenBusiness.

Receive your EIN

If you apply online, you’ll receive your EIN immediately upon successful submission of your application. If you apply by fax, mail, or phone, the IRS will mail you a CP 575 Notice (EIN Confirmation Letter) within four to six weeks.

Can I change my LLC’s taxation structure after getting an EIN?

Yes, one can do so but they might be required to get another EIN if there have been changes in ownership or organization that call for it.

Daily Limitation

IRS wants all taxpayers treated fairly therefore they limit each responsible party to one Employer Identification Number per day. Whether online or by fax/phone/mail request; these rules still apply.

Tax-Exempt Organizations

The IRS suggests that before applying for an Employer Identification Number (EIN), you should legally establish your business under state law as a tax-exempt entity. Once issued however there are filing requirements imposed by the Internal Revenue Service every year failure of which could lead to automatic revocation after three years of non-compliance.

Reporting Instructions

There may be some U.S formed corporations, limited liability companies, and other similar organization types required to submit beneficial ownership information – who owns/controls them ultimately – according to Financial Crimes Enforcement Network (FinCEN) reports due from January 1st, 2024 onwards still need studying along with necessary compliance measures by affected entities.

Mistakes One Should Not Make While Applying for EIN

Although the process involved in acquiring a Federal Tax ID Number also known as an Employer Identification Number (EIN) for your LLC in Texas is generally simple, there are several common errors that one must avoid making; these include:

Applying for EIN before forming an LLC in Texas:

One should never apply for a federal tax ID number before their limited liability company in Texas has been legally established and approved by the relevant state authority like the Texas Secretary of State located at Secretary of State, P.O. Box 13697, Austin, TX 78711-3697. Applying for EIN before registering LLC could lead to complications which may necessitate getting a new one afterwards once the business entity has indeed come into existence

Providing incorrect or incomplete information on the application:

When applying for employer identification numbers, it’s always important to provide accurate details about your organization such as its legal name, physical address where mail can be sent or received from clients number of members involved among others; failure might result in delays during processing time or even outright denial based on misleading input.

Using the wrong filing method:

Although the online application procedure tends to be the fastest and most convenient way of obtaining Federal Tax ID numbers (EINs), some people may not qualify due to various reasons. For example, international applicants without taxpayer identification numbers (TINs) ought to use the telephone instead of online.

Applying before determining taxation structure:

It’s vital one knows how their limited liability will taxed whether sole proprietorship, partnership, or corporation thus helping them choose a suitable option while submitting a request since tax laws vary depending on individual circumstances.

Failure to keep records properly:

Once issued with EIN, make sure to store a copy in a safe place in case the original gets lost. So that you don’t have to generate another one unnecessarily. Avoiding these common mistakes will ensure a smooth and efficient process when applying for an EIN for your LLC in Texas.

Points to Note

EIN Renewal: There is no need to renew your EIN; once given it stays with you until there’s any change of ownership or structure that necessitates obtaining another one.
Same EIN and for multiple businesses: Every separate business entity including Limited Liability Companies (LLCs) must have its own unique Employer Identification Numbers (EINS). You cannot share a single E.I.N. among various enterprises.
Misplaced or Lost EIN: Contact the Internal Revenue Service (IRS) and ask them for another copy of a confirmation letter bearing your Employee Identification Number (EIN) or verification document showing the same information. This will act as proof whenever required.
Change in LLC’s Address: Whenever there is any change of location within Limited Liability Company then the Internal Revenue Service needs to be informed about it immediately so that relevant records can be updated accordingly using Form 8822-B (Change of Address or Responsible Party).

FAQs

What is a domestic EIN in Texas?

A domestic EIN in Texas is an Employer Identification Number assigned by the IRS to businesses operating in the state.

How do I apply for a domestic EIN in Texas?

You can apply for a domestic EIN in Texas online through the IRS website or by filling out Form SS-4 and submitting it by mail or fax.

Do I need a domestic EIN in Texas if I am a sole proprietor?

If you are a sole proprietor in Texas and do not have any employees, you may not need a domestic EIN. However, it is recommended to have one for tax and banking purposes.

Can I use my domestic EIN in Texas for multiple businesses?

No, each business entity in Texas requires its own domestic EIN.

How long does it take to receive a domestic EIN in Texas?

You can receive your domestic EIN in Texas immediately after applying online, or within a few weeks if you mail or fax your application.

Is there a fee for getting a domestic EIN in Texas?

No, there is no cost to apply for a domestic EIN in Texas.

Can I use my domestic EIN from another state for my Texas business?

No, you will need to apply for a separate domestic EIN specifically for your Texas business.

Do partnerships in Texas need a domestic EIN?

Yes, partnerships in Texas are required to have a domestic EIN for tax reporting purposes.

Can I update my business information on my Texas domestic EIN?

Yes, you can update your business information on your Texas domestic EIN by filling out Form 8822-B.

Can I cancel a domestic EIN in Texas?

Yes, if you are no longer in business or no longer require a domestic EIN in Texas, you can cancel it by writing a letter to the IRS.

Do I need a domestic EIN in Texas if I am a freelancer?

If you are a freelancer operating as a sole proprietor in Texas with no employees, you may not need a domestic EIN.

Are there any penalties for not having a domestic EIN in Texas?

Failure to have a domestic EIN in Texas when required by law may result in penalties from the IRS.

Can I apply for a domestic EIN in Texas without a Social Security Number?

No, you must have a Social Security Number to apply for a domestic EIN in Texas.

Do LLCs need a domestic EIN in Texas?

Yes, LLCs in Texas are required to have a domestic EIN for tax reporting purposes.

Can I apply for a domestic EIN in Texas if I am a non-profit organization?

Yes, non-profit organizations in Texas can apply for a domestic EIN for tax-exempt purposes.

Can I use a domestic EIN in Texas for my side business?

Yes, you can use a domestic EIN in Texas for your side business as long as it is a separate legal entity.

Is a domestic EIN in Texas the same as a state tax ID number?

No, a domestic EIN in Texas is issued by the IRS and used for federal tax purposes, while a state tax ID number is issued by the state for state tax purposes.

Can I transfer my domestic EIN from another state to Texas?

No, you cannot transfer a domestic EIN from another state to Texas. You will need to apply for a new domestic EIN specifically for your Texas business.

Can I apply for a domestic EIN in Texas if my business is based in another state but operates in Texas?

Yes, if your business operates in Texas, you can apply for a domestic EIN specifically for your Texas business.

Is a domestic EIN different in Texas compared to other states?

No, a domestic EIN is the same in Texas as it is in other states. It is a unique identifier assigned to businesses for tax purposes.

What information do I need to provide when applying for a domestic EIN in Texas?

You will need to provide basic information about your business, such as the legal name, address, and type of business entity.

How long does it take to get a domestic EIN in Texas?

In most cases, you will receive your domestic EIN immediately after submitting your online application.

Can I use the same domestic EIN for multiple businesses in Texas?

No, each business entity must have its own unique domestic EIN.

Do I need a domestic EIN in Texas if I am operating a non-profit organization?

Yes, non-profit organizations in Texas are required to have a domestic EIN for tax-exempt status.

Can I use my domestic EIN in Texas to hire employees?

Yes, you can use your domestic EIN to hire employees and report payroll taxes to the IRS.

How do I change the address associated with my domestic EIN in Texas?

You can update your address with the IRS either online or by submitting a paper form.

Can I use my domestic EIN in Texas to open a business bank account?

Yes, most banks will require you to provide your domestic EIN when opening a business account.

Do I need a domestic EIN in Texas if I am a freelancer or independent contractor?

While freelancers and independent contractors are not required to have a domestic EIN, it can be helpful for tax purposes and separating personal and business income.

Can I use my domestic EIN in Texas to apply for business licenses and permits?

Yes, you will likely need to provide your domestic EIN when applying for business licenses and permits in Texas.

How do I cancel a domestic EIN in Texas?

You can cancel your domestic EIN by sending a letter to the IRS with the name and address of the business, the EIN, and the reason for the cancellation.

Can I transfer my domestic EIN to a new owner if I sell my business in Texas?

No, domestic EINs are not transferable. The new owner will need to apply for a new EIN for the business.

Can I file my Texas state taxes using my domestic EIN?

Yes, you can use your domestic EIN to file both federal and state taxes in Texas.

Do I need to renew my domestic EIN in Texas?

No, domestic EINs do not expire and do not need to be renewed.

Can I use my domestic EIN in Texas to apply for government contracts?

Yes, many government agencies require businesses to have a domestic EIN to apply for contracts.

Do I need a domestic EIN in Texas if I am a foreign entity doing business in the state?

Yes, foreign entities doing business in Texas are required to have a domestic EIN.

How do I get a copy of my domestic EIN confirmation letter in Texas?

You can request a copy of your domestic EIN confirmation letter from the IRS by calling their helpline or visiting a local IRS office.

Conclusion

Getting an Employer Identification Number (EIN) from Texas is a necessary step for any LLC. The process is not complicated, but it is important to know what is required and follow all necessary steps in order to comply fully with local and federal laws.

This article depicts how to get your LLC’s EIN in Texas by avoiding mistakes that many people make. There are several benefits of having an EIN for your business such as separating personal and company finances, establishing credibility, and protecting against identity thefts among others also makes hiring employees easy. Having a professional LLC formation service, like ZenBusiness, that offers EIN services in their formation packages.

Remember always consult with experts like accountants or lawyers if there are any questions specific about getting an EIN for an LLC registered in Texas. They can give advice based on individual circumstances.