What is an EIN?
An Employer Identification Number (EIN), also sometimes referred to as a Federal Employer Identification Number (FEIN), is a nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States. It's used to identify a business entity for tax reporting and other business documentation. Here are a few reasons why you might need an EIN for your Limited Liability Company (LLC):
Tax Reporting: An EIN is necessary for filing federal tax returns. It helps the IRS track your business's tax obligations and payments.
Business Identification: The EIN serves as a unique identifier for your business, much like a Social Security Number does for individuals.
Opening a Business Bank Account: Most banks require an EIN to open a business bank account. This helps in separating personal finances from business finances, which is critical for maintaining the liability protections of an LLC.
Applying for Business Licenses and Permits: Depending on your jurisdiction, you may need an EIN to apply for various business licenses and permits.
Hiring Employees: If you plan to hire employees, you will need an EIN to report employment taxes and for other employee-related documentation.
Establishing Payroll: Setting up a payroll system to pay employees also requires an EIN for tax withholding and reporting purposes.
Building Business Credit: An EIN allows you to build credit under your business's name. Establishing business credit can help you secure loans or lines of credit in the future.
Contracting and Business Agreements: Having an EIN can sometimes facilitate entering into business contracts or agreements, as it clearly establishes your business as a separate legal entity.
What Is a CP-575 Letter?
Form CP-575 is an IRS notice confirming that you have been granted an EIN. The CP-575 letter includes important tax information about your business including your:
EIN, a nine-digit number used for filing your federal payroll taxes
Business name
Business’s official filing address
Federal tax forms your company is required to file (such as the 1120s)
Why do I need a CP-575 letter?
Form CP-575 is an important document because it serves as proof of all the things listed above. You’ll often need it to open business bank accounts, get payroll set up with your payroll provider, and communicate with certain government agencies. So once you’ve got it, be sure to keep it in a safe place. We keep a copy for you in your Collective dashboard.
What if I can’t find my CP-575 Letter? The 147-C Letter!
Don’t panic. While the IRS won’t issue a new one, you can request the CP-575’s twin sister, the EIN verification letter known as a LTR 147-C. You can use this new form as alternative proof of your businesses’ filing address, name, and EIN. You can ask for the 147-C to be mailed to you, but this will take 10-14 business days to receive the copy in the mail. Alternatively, you can ask for the 147-C to be faxed, so that you will receive the copy right away. If you do not have a fax number, you can have the form faxed directly to Collective, our fax number is +1 650-275-4240 (it is a private and secure fax line).
Call 1-800-829-4933 (the “business and specialty tax line”).
Press option 1 for English.
Press option 1 for Employer Identification Numbers.
Press option 3 for “If you already have an EIN, but you can’t remember it, etc.”
Tell the IRS agent that you have an LLC and need an EIN Verification Letter (147C).
The IRS agent will ask a few security questions to confirm you own your LLC.
Tell the IRS agent whether you’d like to receive the 147C Letter by fax.
Tip: The IRS agent will ask, “Do you have a private and secure fax next to you?” If using a digital/online fax, say "yes".
Example CP 575 Letter:
Example Letter 147C:
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.