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, opening a business bank account is often required, and it adds a degree of separation between your business and personal finances. Bankers, creditors, and the IRS will identify your business by its EIN rather than your personal Social Security number.
Second, it helps establish business credit, boosting your access to financing. Third, if you 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 South Dakota?
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:
Name, title, and Social Security number of managing member or owner
State in which your business is registered
Reason for applying
Main business activity
Closing month of your accounting year
Contact phone number and email
How to Apply for an EIN in South Dakota
The application is Form SS-4, and you can submit it via the IRS website. Alternatively, you can print the form and fax or mail it. If you apply online, your EIN will be issued immediately.
There is no cost to obtain an EIN, which never expires.
Register for South Dakota Taxes
You also may need to register for business taxes in South Dakota.
You don’t need to register to withhold income tax if you have employees, as South Dakota has no state personal income tax. However, you need to register for unemployment taxes with the Department of Labor and Regulation.
If you sell goods or services subject to sales tax, you’ll need to register to collect and pay sales tax with the Department of Revenue.
Your local government may also require certain tax registrations.
Even if your LLC does not need to obtain an EIN in South Dakota, getting one is probably the best move for your business, its finances, and its future. Just be sure to fill out the forms correctly and keep your business on the path to success.
What's the fee associated with obtaining an EIN for my South Dakota LLC?
If you apply directly with the IRS, there is no charge to obtain an EIN. However, be aware of third-party services that might impose fees to obtain an EIN on your behalf.
How long will it take to get my EIN after applying online in South Dakota?
The online application process is generally immediate. Upon successful submission, you will usually receive your EIN instantly.
Can I use an EIN from a previous business for my new South Dakota LLC?
No. If you have established a new business entity, such as transitioning from a sole proprietorship to an LLC, you need to obtain a new EIN.
Can I use my Social Security Number (SSN) in place of an EIN for my South Dakota LLC?
While it’s technically possible in some cases, it’s not recommended. Having an EIN separates your personal finances from your business activities, providing added legal and financial protection.
Should I register my LLC in South Dakota first before applying for an EIN?
Yes. The state of South Dakota must recognize your LLC as a legally formed entity before you can obtain an EIN for it.
Is there a need to renew my EIN after a certain period in South Dakota?
No, once your South Dakota LLC has its EIN, it remains valid for the life of the business unless there are significant changes to the business structure.