EIN Guide for Texas LLC Owners

EIN Guide for Texas LLC Owners

This comprehensive EIN guide will demystify the EIN concept as it relates to Texas LLCs and clearly explain why, when, and how to obtain an EIN for your Texas LLC.

What is an EIN?

An Employer Identification Number (EIN) is a unique nine-digit federal tax ID issued to a business by the IRS. Although any type of business may apply for an EIN, this article will focus on the issues related to limited liability companies (LLCs).

Why Your Texas LLC Needs an EIN

A Texas LLC will need an EIN if it will:

  • be taxed like a corporation or partnership;
  • hire W2 employees;
  • pay federal excise taxes; or
  • open a bank account.

Since an EIN is required to open a bank account, virtually every Texas LLC will require one for banking purposes.

Starting January 1, 2024, the Corporate Transparency Act (CTA) mandates that all LLCs submit a beneficial owner information report (BOIR) to the federal government. This report must include the LLC's EIN. Therefore, the CTA adds another reason for your Texas LLC to obtain an EIN.

When to Apply for an EIN

A Texas LLC can apply for an EIN as soon as the LLC is formally registered with the state (i.e., when the Secretary of State approves the Certificate of Formation).

How to Apply for an EIN for Your Texas LLC

The easiest way to get an EIN is to apply online. A Texas LLC will receive an EIN instantly after submitting the online application. You may also submit an EIN application (IRS Form SS-4) to the IRS by fax or mail.

Frequently Asked Questions

How much does it cost to get an EIN?

The IRS does not charge for an EIN, and there is no filing fee. We charge $75 to get an EIN for our clients. If you would like us to get an EIN for your Texas LLC, you can submit the request within an LLC formation order form or via our EIN order form.

How long does it take to get an EIN for a Texas LLC?

An EIN can be obtained on the same business day if the online application is used. If Form SS4 is faxed to the IRS, it will take 4-7 business days. Lastly, if Form SS4 is mailed to the IRS, it will take 4-5 weeks to get the EIN.

  • Online: Same day
  • Fax: 4-7 business days
  • Mail: 4-5 weeks

What is a CP 575?

CP 575 is the official name of the EIN Assignment Letter issued by the IRS when the EIN Application is approved.

What is a 147c Letter?

An IRS 147c letter, or EIN Verification Letter, is a document the Internal Revenue Service (IRS) provides to verify a company's Employer Identification Number (EIN). Businesses usually request this letter when they have lost or misplaced their EIN and need official confirmation for various reasons, such as opening a bank account, applying for business licenses, or filing tax returns.

Please feel free to request the 147c letter by calling the IRS at 800-829-4933. Be prepared to answer several security questions. The IRS will then mail or fax the letter to you.

Does my Texas LLC need an EIN if it is not an employer?

Don’t let the word “Employer” in Employer Identification Number (EIN) deceive you. An EIN is not just for businesses that have employees.

When is the online EIN application not viable?

The online EIN application is only viable if (a) at least one of the owners has a U.S. social security number and (b) an EIN has not already been issued to an LLC with the same name via the online EIN application. In addition, the online EIN application is only available Monday to Friday, 7 a.m. to 10 p.m. Eastern Standard Time.

When will I be able to use my EIN?

An EIN can be used immediately for most of your business needs, including:

  • Opening a bank account
  • Applying for business licenses
  • Filing a tax return by mail
  • Filing a beneficial owner information (BOI) report to comply with the CTA.

However, it will take up to two weeks before your EIN becomes part of the IRS's permanent records. So, you'll need to wait until this happens before you can file an electronic return, make an electronic payment, or pass an IRS Taxpayer Identification Number matching program.

What is the difference between a federal tax ID and a Texas tax ID?

The federal tax ID (aka EIN) is a 9-digit number (XX-XXXXXXX). It must be applied for and is issued by the IRS. The federal tax ID is used for federal reporting, federal taxes, and bank accounts.

The Texas tax ID is an 11-digit number issued automatically by the Texas Comptroller (no application necessary). It is used for Texas sales tax and franchise taxes.

Will I need a new EIN if the LLC’s name changes?

No. If the name of your LLC changes, you will simply need to send a notice to the IRS. You can read more on the IRS website.

Will I need a new EIN if I convert from a sole proprietorship to a single-member LLC?

A sole proprietor that obtained an EIN for their sole proprietorship should get a new EIN for their single-member LLC. The guidance issued by the IRS is not entirely clear, as it states "[a sole proprietor] will be required to obtain a new EIN if...you incorporate." This is confusing because the term "incorporate" is typically reserved for corporations, while the term "formed" is used when creating/forming an LLC. Nevertheless, the best practice is to obtain a new EIN for the new LLC.

How do I cancel an EIN?

The IRS does not cancel or void EINs. Once an EIN has been assigned to a business entity, it becomes the permanent Federal taxpayer identification number for that entity.

Since you can’t cancel an EIN, the only option is to close the business account. To achieve this, you’ll have to send the IRS a letter that includes the name of your company, the EIN, the business address, and why you wish to close the account.

Disclaimer: We are not CPAs nor tax professionals and nothing in this article or on this site should be considered as tax, accounting, or legal advice. This article has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Zachary Copp, Esq.

Attorney at Copp Law Firm, PC

Mr. Copp is a graduate of the University of Texas at Austin and the founder of the Copp Law Firm. He has been licensed in Texas for 20 years and has personally formed over 3,500 Texas LLCs since 2015. He was recognized as a Rising Star by SuperLawyers® for seven straight years. See full bio →