If your LLC has more than one member or if you are going to hire employees, you’ll need an EIN. But these aren’t the only factors. The IRS offers a test to determine if you need an EIN:
Do you have employees?
Do you operate your business as a corporation or a partnership?
Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco, and Firearms?
Do you withhold taxes on income, other than wages, paid to a non-resident alien?
Do you have a Keogh plan?
Are you involved with any of the following types of organizations?
Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
Real estate mortgage investment conduits
If you answer yes to these questions, your business needs an EIN.
Benefits of Having an EIN
There are several reasons to get an EIN, even if you’re not required to have one. First, it’s often required to open a business bank account. It creates separation between your business and personal finances because your business will be identified by creditors and the IRS by your EIN instead of your social security number.
Also, it helps establish business credit, which will boost your access to financing. And, if you do end up hiring employees in the future, you’ll already have your EIN and be ready to go.
What Do I Need to Get an EIN in Colorado?
According to the IRS:
All EIN applications (mail, fax, electronic) must disclose the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner, or trustor. This individual or entity, which the IRS will call the ‘responsible party,’ controls, manages or directs the applicant entity and the disposition of its funds and assets. Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity.
When you fill out the application, you’ll need the following:
If you sell goods or services subject to sales tax, you’ll need to register for a sales tax permit on the MyBizColorado website.
Your local government may also require certain tax registrations.
Are there any fees associated with obtaining an EIN for my Colorado LLC?
No. The IRS offers EINs at no cost. You can directly apply through their platform without incurring any charges.
Once I've submitted my application, how long does it take to receive the EIN in Colorado?
If you apply online, you’ll usually get your EIN instantly upon completing the application. For faxed submissions, it might take about four business days. Mail applications could require up to 4-5 weeks.
I run a single-member LLC in Colorado. Is an EIN still necessary?
While certain operations can be done with just your SSN, it’s generally recommended to acquire an EIN for privacy reasons and to fulfill various business requirements.
I'm a non-resident without an SSN. Can I still get an EIN for my Colorado LLC?
Yes, foreign entities and individuals can obtain an EIN for their Colorado LLC. You can apply without an SSN or ITIN, usually via mail or fax.
Once I have my EIN, are there Colorado-specific obligations I need to address?
While the EIN is federally recognized, your LLC might have other state-related duties, such as registering for state taxes or ensuring proper licensing in Colorado.
If my previous Colorado LLC was dissolved and I establish a new one, can I use the same EIN?
Typically, a new LLC will necessitate a new EIN, regardless of past business similarities.