Multiple LLCs with One EIN: Is It Possible?

The prospect of managing multiple LLCs under a single EIN might sound appealing for its simplicity, but it’s essential to understand the implications before moving forward. Generally, each LLC requires its own EIN, but there are scenarios where multiple LLCs can be consolidated under one EIN.

In this guide, we’ll explore the potential benefits and drawbacks of this approach, and how you can navigate the process effectively.

Plus, with doola’s expertise, you can seamlessly form and form multiple LLCs with the right EIN strategy. Let’s dive in and learn more about LLCs

Understanding EINs and LLCs

Before delving into the possibility of having multiple LLCs under one EIN, it’s important to understand what an EIN is and its significance for businesses, and how it relates to LLCs.

An Employer Identification Number (EIN) is a unique nine-digit tax identification number assigned by the Internal Revenue Service (IRS) to identify businesses, trusts, estates, and other entities for tax purposes. 

Think of it as a social security number for your business. Every business entity that engages in activities with tax implications, such as hiring employees or filing tax returns, typically needs an EIN.

A Limited Liability Company (LLC) is a legal entity that combines the limited liability features of a corporation with the pass-through taxation of a partnership or sole proprietorship. 

It separates personal and business assets and protects owners from personal liability for the business’s debts or legal problems. LLCs offer a simple and flexible structure for small businesses, start-ups, and even single-member businesses.

The connection between an EIN and an LLC is that the statutory provisions for operating an LLC provide that you need an EIN to do business.

In other words, it’s a legal requirement to apply for an EIN if you wish to do business as an LLC.

When Do You Need Multiple EINs?

There are several situations where obtaining multiple EINs might be necessary. Primarily, if you have multiple LLCs — each business typically needs its own unique EIN, as they’re treated as separate entities for tax purposes.

Additionally, if you operate different businesses not consolidated under a single LLC, each business requires a distinct EIN, whether they are structured as sole proprietorships, partnerships, or corporations. 

When Do You Not Need Multiple EINs?

While there are instances where having multiple EINs is necessary, there are also situations where you can operate without needing multiple EINs. 

Here are some circumstances when you don’t need multiple EINs:

💡 Single-Member LLC: If you are the sole owner of an LLC and have not chosen to be taxed as a corporation, you generally do not need a separate EIN. Instead, you can use your Social Security Number (SSN) for tax purposes, as the LLC’s income and expenses will be reported on your personal tax return.

💡 Sole Proprietorship: If you are operating as a sole proprietor without an LLC or any other formal business structure, you don’t need an EIN. As a sole proprietor, you can use your SSN to report your business income and expenses on your personal tax return.

💡 Partnership: In a partnership where there are multiple owners sharing profits and losses, the partnership itself does not require an EIN. Instead, the partnership files an informational tax return (Form 1065) to report its income and expenses, while each partner reports their share on their individual tax returns.

Even if you do not need multiple EINs, you may still choose to obtain one for organizational or privacy reasons.

If your business circumstances change in the future, you may need to apply for an EIN to meet new requirements or tax obligations. 

Who Can Apply for an EIN Number?

This application is open to individuals and entities responsible for running a business, including sole proprietors, partnerships, corporations, and limited liability companies, 

To apply for an EIN — both the principal business location requirement (within the U.S. or U.S. territories) and a valid taxpayer identification number (such as a Social Security number) must be met. 

How to Apply for More Than One EIN?

Here is a step-by-step guide on how to apply for more than one EIN:

✅ Determine your eligibility: Generally, each separate legal entity or business requires its own EIN. This includes entities such as LLCs, corporations, and limited partnerships. However, certain situations may allow for multiple businesses to operate under a single EIN, known as “disregarded entities.”

✅ Gather required information: Collect the necessary information for each EIN application, including the legal name of each entity, the responsible party’s name and taxpayer identification number, the business address, and the type of entity (e.g., LLC, corporation, partnership).

✅ Choose the application method: Decide whether to apply online, by mail, fax, or phone. The online application (Form SS-4) is generally the fastest and most convenient method.

✅ Submit the application: Depending on the chosen method, submit the completed application form electronically, by mail, fax, or phone, and follow the instructions provided by the IRS for each application method.

✅ Set up a business bank account: Once you have your EIN(s), it’s essential to open a separate business bank account for each LLC to ensure proper financial management and compliance with tax regulations.

✅ Wait for confirmation: After submitting the application, allow time for the IRS to process your request. For online applications, you will receive an EIN immediately upon successful submission. For other methods, you will receive an EIN through the preferred communication method specified in your application.

✅ Keep records: Once you receive the EINs, make sure to keep records of each EIN and associate them with the respective entities for future reference and compliance purposes.

If you are still unsure about the application process, consider consulting a tax professional from doola to guide you through the legal implications that can arise from applying for multiple EINs. 

Advantages of Multiple LLCs Under One EIN

Transitioning to a structure where multiple LLCs operate under one EIN can offer significant benefits. It’s not a one-size-fits-all solution, but it could potentially streamline operations for certain businesses.

Here are four key advantages of having multiple LLCs under one EIN:

✅ Simplified Administration: Operating multiple LLCs under one EIN can simplify business administration. Instead of managing multiple tax filings, the consolidated business structure allows you to handle all business transactions, tax payments, and regulatory compliance under one roof, thus reducing paperwork and administrative complexity.

✅ Efficient Cash Flow Management: This structure provides an overview of all your businesses’ cash flow in one place. This can make it easier to manage funds, reduce the chance of overspending, and provide a clearer picture of your overall financial health.

✅ Enhanced Business Continuity: In the event of changes or disruption to one LLC, having multiple LLCs under one EIN ensures business continuity. The other LLCs under the same EIN can continue to operate normally, thereby reducing risk and ensuring stability.

✅ Streamlined Growth and Expansion: For entrepreneurs planning to create multiple businesses or expand into different areas, operating under a single EIN can make the process of starting new LLCs more streamlined and efficient.

Limitations of Multiple LLCs Under One EIN

While applying for multiple LLCs under one EIN has its benefits, it does come with its own set of considerations and potential drawbacks.

Here are some points to consider:

➡️ Shared Liability: Operating multiple LLCs under one EIN can blur the lines of liability. LLCs are usually separate entities to protect personal and business assets. However, when grouped under one EIN, an issue with one LLC could potentially impact the others, posing a risk to the overall business structure.

➡️ Complex Taxation: While you might save time on administration, having multiple LLCs under one EIN could make your taxes more complicated. It can be more difficult to distinguish the income and expenses of each LLC, which could complicate your tax reporting and potentially raise flags with the IRS.

➡️ Reduced Business Autonomy: Each LLC under one EIN may not have the same degree of autonomy as it would if it had its own EIN. Decision-making and financial management may need to be centralized, which could limit the ability of each LLC to operate independently.

➡️ Limited Business Growth: Having multiple LLCs under one EIN can potentially constrain business growth. If one LLC thrives, separating it or selling a stake can be challenging due to shared EINs. This shared identity can also complicate strategic maneuvers, such as spinning off a successful LLC or attracting investors. Therefore, if you plan and expect significant business growth, the shared EIN approach may present a notable limitation.

Your Guide to Having Multiple LLCs Under One EIN With doola

Managing multiple LLCs under a single EIN can significantly streamline your business operations and simplify tax compliance. However, the complexities involved in this process, from formation to ongoing financial management, can be daunting. Ensuring full compliance while avoiding potential legal liabilities is crucial to maintaining your company’s overall performance.

This is where doola comes in.

With our comprehensive EIN and LLC formation services, we make can set up your business entities across all 50 states, ensuring that each step is handled professionally and efficiently. But it doesn’t stop there — we also offer robust tax filing and bookkeeping solutions tailored to your specific needs.

Book a free consultation with us today to discover how we can simplify your business management, allowing you to focus on growth while we take care of the technical details.

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