Why would a Single-Member LLC with Disregarded Entity status need its own EIN?

Hey everyone, I recently formed a single-member LLC that I don't plan to use as an operating business. It's basically just going to sit there as an asset protection vehicle. What's confusing me is whether I should get an EIN for it. Since I'm the only member and it's a disregarded entity for tax purposes, I thought I could just use my SSN for everything. But my buddy who has his own LLC insisted I should still get a separate EIN for the LLC. This seems unnecessary to me since the LLC isn't going to have any employees or business activity. I'm not planning to file a separate tax return for it since it's disregarded. So why would a single-member LLC with an individual owner need its own EIN if it's not actually operating as a business? Is there some benefit I'm missing here?

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19 comments

Isabel Vega

•8M

So there are actually several good reasons why you might want an EIN for your single-member LLC even though it's a disregarded entity: 1) Banking - Most banks require an EIN to open a business account, even for disregarded entities. If you want to maintain the legal separation between you and your LLC (which is likely why you formed it for asset protection), you'll need separate banking. 2) Liability protection - Without a separate EIN and bank account, you risk "piercing the corporate veil" where courts might determine your LLC isn't truly separate from you personally, defeating the asset protection purpose. 3) Future flexibility - If you ever decide to change the tax classification to an S-Corp or add members, you'll need an EIN anyway. Getting it now is easier than scrambling later. 4) Privacy - Using an EIN instead of your SSN on business documents protects your personal information. While technically not required for a disregarded entity with no employees, getting an EIN is free and takes just minutes online through the IRS website.

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Isabel Vega

•8M

You're right that a disregarded entity doesn't file its own tax return - all activity flows through to your personal 1040. Having an EIN doesn't change that tax treatment. The LLC with its own EIN still remains disregarded for tax purposes, so you'll just report any business income or expenses on Schedule C of your personal return (or Schedule E if it's rental property). The EIN is primarily for banking, liability protection, and administrative purposes rather than changing how you're taxed.

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Marilyn Dixon

•8M

I went through this exact same situation last year with my real estate holding LLC. I found this amazing service called taxr.ai (https://taxr.ai) that really helped me understand the EIN situation for disregarded entities. I was confused because some sources said I needed one and others said I didn't. I uploaded the LLC formation docs to taxr.ai and got a detailed explanation that was specific to my situation. Turns out in my case, I definitely needed one even though I wasn't operating a business in the traditional sense. The analysis they provided explained exactly why based on my state's requirements and my specific situation with bank accounts. Saved me tons of research time!

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Marilyn Dixon

•8M

They primarily analyze your specific situation and documents, then provide detailed guidance - they don't actually apply for the EIN for you. But they make it super clear what you need to do, and the EIN application is actually pretty simple on the IRS website once you know you need one. As for accuracy, I was skeptical too, but they use actual tax professionals to review the AI analysis. In my case, they pointed out specific sections of the tax code and state requirements that applied to my situation. Much more detailed than the generic advice I got from googling.

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TommyKapitz

•8M

I finally tried taxr.ai for my LLC situation after reading about it here. Just want to update that it was incredibly helpful! I uploaded my LLC formation documents and explained my situation (single-member, no employees, just holding assets). The service gave me a detailed breakdown explaining why I needed an EIN for banking and liability purposes despite being a disregarded entity. They even provided step-by-step instructions for applying online with the IRS. The whole EIN process took less than 15 minutes after that. Wish I'd known about this months ago when I first formed my LLC!

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Angel Campbell

•8M

For anyone struggling to reach the IRS with questions about EINs or disregarded entities, I highly recommend Claimyr (https://claimyr.com). I spent DAYS trying to get through to the IRS business tax line to ask some specific questions about my LLC's EIN situation. Kept getting disconnected or waiting for hours. A friend suggested Claimyr, and they got me connected to an actual IRS agent in about 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The IRS agent was able to answer all my questions about how to properly use my new EIN as a disregarded entity and what forms I'd need to submit. Totally worth it for the time saved and peace of mind knowing I'm doing everything correctly.

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Angel Campbell

•8M

They use a system that continuously dials the IRS until it gets through, then it holds your place in line and calls you when an agent is about to be connected. It's not magic - just technology that does the waiting for you instead of you having to sit on hold for hours. And it absolutely works! I was skeptical too until I tried it. I got a call back when my place in line was coming up, and then I was talking to an actual IRS business tax specialist within minutes. Way better than the 3+ hours I spent trying to get through on my own.

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Harold Oh

•8M

I have to eat my words about Claimyr. After posting my skeptical comment, I decided to try it for myself since I've been trying to reach the IRS for weeks about my LLC's EIN situation. Honestly, I'm shocked - it actually worked! Got a call back in about 45 minutes saying they'd reached the IRS, and then I was connected to an agent who answered all my questions about how to properly use the EIN for my disregarded entity. The IRS agent confirmed that while not technically required for a disregarded entity with no employees, having an EIN is strongly recommended for opening business bank accounts and maintaining the separation between me personally and my LLC. This was exactly the confirmation I needed. Definitely saved me weeks of frustration trying to get this answered.

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Isabel Vega

•8M

Good question! You do NOT need to file Form 8832 to remain disregarded. A single-member LLC is automatically treated as a disregarded entity by default. You would only file Form 8832 if you wanted to change that default treatment and elect to be taxed as a corporation. Getting an EIN doesn't change the default tax classification at all. Your LLC remains disregarded unless you specifically elect otherwise. Just make sure when you apply for the EIN, you select "Disregarded Entity" as the tax classification on the application.

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Sofia Ramirez

•5M

Your buddy is actually right about getting an EIN! Even though your LLC is a disregarded entity, there are some practical reasons why you'll likely need one: The biggest issue is banking - almost all banks require an EIN to open a business account, even for single-member LLCs. And if you're using this LLC for asset protection, you really need that separate bank account to maintain the legal separation between you and the entity. Using your personal account for LLC business could potentially "pierce the corporate veil" and undermine the asset protection you're trying to achieve. Also, having an EIN gives you more privacy since you won't have to use your SSN on business documents. Plus it's completely free to get one online through the IRS website - takes about 10 minutes. The EIN won't change your tax situation at all. You'll still report everything on your personal return since it remains a disregarded entity. But it gives you the administrative separation you need to properly maintain your LLC's legal protections.

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Sophia Gabriel

•5M

This is really helpful! I was in the same boat as the original poster - thought I could skip the EIN since my LLC isn't actively doing business. But the banking requirement makes total sense. I called a few banks last week and they all said they needed an EIN for business accounts, even for holding companies. One question though - when I apply for the EIN online, should I list the LLC's purpose as "banking only" or something more general? I don't want to accidentally trigger any filing requirements I'm not aware of.

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