Meta Title: EIN or LLC First? Which Comes First When Starting a Business (2025 Guide)
Meta Description: Should you get an EIN or form an LLC first? Learn why forming your LLC before applying for an EIN is critical, what happens if you reverse the order, and how to do it right.
Introduction
If you’re starting a business in 2025, chances are you’ve already come across two critical terms: LLC and EIN.
You may be wondering:
👉 “Should I get an EIN or form an LLC first?”
It’s a common question — but one that trips up thousands of new entrepreneurs each year. And yes, the order matters more than you might think.
This guide explains the right order, the consequences of getting it wrong, and the step-by-step process to do it the smart way — legally and financially.
What Is an EIN?
An EIN (Employer Identification Number) is a 9-digit tax ID issued by the Internal Revenue Service (IRS). It functions much like a Social Security Number (SSN), but for your business.
What You Use an EIN For:
- Opening a U.S. business bank account
- Hiring employees
- Filing federal taxes
- Applying for business licenses
- Working with Stripe, PayPal, or Amazon
- Establishing your business identity with banks, vendors, and government agencies
Applying for an EIN is free on the IRS website at irs.gov, and it can often be completed in just minutes (for U.S. residents) or a few days (for non-residents).
What Is an LLC?
An LLC (Limited Liability Company) is a legal business entity registered at the state level. It is one of the most popular business structures for small businesses in the U.S.
Benefits of Forming an LLC:
- Personal liability protection – shields your assets from lawsuits or debts
- Pass-through taxation – business income passes to your personal tax return
- Professional image – enhances credibility with clients, banks, and investors
- Separate legal entity – separates your personal and business finances
- Easier access to funding – most banks require LLC formation before account setup
Each U.S. state has its own rules for LLC formation, but the overall process is fairly consistent.
Key Differences Between EIN and LLC
| Feature | EIN | LLC |
|---|---|---|
| Issued by | IRS (Federal Government) | State Government |
| Purpose | Tax ID for your business | Legal structure for your business |
| Cost | Free | Varies by state (typically $50–$500) |
| Legal Protection | No | Yes (protects personal assets) |
| Used For | Taxes, banking, payroll | Liability protection, compliance |
| Required For | Hiring, banking, tax filing | Legal business operations |
Should You Get an EIN or LLC First?
Always form your LLC first.
Why? Because your EIN application requires your legal business name, entity type, and state of formation.
Getting an EIN before your LLC is formed can lead to:
- IRS errors
- Bank rejections
- Name mismatches
- Tax filing confusion
- Needing to cancel and reapply
Why the LLC Should Always Come First
1. Your EIN is tied to your business structure
When applying for an EIN, you’re asked to specify:
- Business name
- Legal structure (LLC, sole proprietorship, etc.)
- Date of formation
- State of registration
If your LLC hasn’t been officially registered yet, the IRS may:
- Issue the EIN to a sole proprietorship instead
- Use a name that’s already taken or unavailable
- Create a mismatch between IRS and state records
2. Changing EIN info is time-consuming
Once you get an EIN, the IRS links it to your original business details. Changing them later may require:
- Cancelling the EIN
- Waiting weeks for IRS processing
- Reapplying from scratch
What Happens If You Get an EIN Before Your LLC?
Many entrepreneurs make the mistake of getting an EIN first — especially if they’re in a rush to open a business bank account or apply for Stripe or Amazon.
But here’s what can go wrong:
Scenario 1: Name Mismatch
You form an LLC with a slightly different name than the one you gave the IRS. Now your EIN doesn’t match your LLC.
Result: Banks may reject your application or request corrections.
Scenario 2: Wrong Entity Type
You select “sole proprietorship” by mistake because your LLC wasn’t formed yet.
Result: You’ll need to cancel the EIN and reapply as an LLC.
Scenario 3: State Rejects LLC Name
You get an EIN for “BrightEdge Solutions LLC” — then find out someone already registered that name in your state.
Result: You must form under a new name and cancel the EIN.
Business Banking: Why the Order Matters
Banks and fintech platforms like Mercury, Relay, and Wise typically require:
- Articles of Organization (LLC approval)
- EIN letter from the IRS
- Operating Agreement
Without an officially formed LLC, your EIN alone won’t be enough to:
- Open a business bank account
- Apply for a business credit card
- Get business financing
IRS Implications of EIN Without LLC
The IRS assumes the structure you enter during the EIN application is accurate and final.
If you later form an LLC and want to use that EIN:
- The IRS may reject your business tax filings
- You might need to file for a new EIN
- Errors could delay tax refunds or create audit risks
What If You Started as a Sole Proprietor and Switched to an LLC?
This is a common path for new entrepreneurs.
Important:
If you originally got your EIN as a sole proprietor, you must apply for a new EIN when converting to an LLC.
The IRS treats these as different entities — even if you’re still the sole owner.
Real-World Scenarios & Mistakes
Example 1:
A designer gets an EIN for her freelance business, then forms “PixelMint Studio LLC” later. Her bank rejects the EIN because it doesn’t match the LLC name.
Example 2:
A startup founder gets an EIN thinking he’ll register the LLC soon. But his state rejects the name. Now his EIN is tied to a name he can’t legally use.
Lesson: Don’t get ahead of the process. LLC first — always.
How to Cancel an Incorrect EIN
If you got your EIN too early or used the wrong info:
- Write a letter to the IRS stating you want to cancel the EIN
- Include your EIN confirmation letter (CP 575)
- Include your name, contact, and reason for cancellation
- Mail to:
Internal Revenue Service
Cincinnati, OH 45999
It can take 4–6 weeks for the cancellation to be processed.
Step-by-Step: Proper Order for Business Setup
The Correct Sequence
- Choose a business name
- Check availability in your chosen state
- Form your LLC (file Articles of Organization)
- Draft an Operating Agreement (recommended)
- Apply for an EIN via irs.gov
- Open a business bank account
- Apply for any required licenses or permits
- Set up payment processors and invoicing tools
EIN and LLC for Non-U.S. Residents
If you’re a non-U.S. resident, the order is even more important.
- You must first form your LLC using a Registered Agent in the U.S.
- Then apply for an EIN using Form SS-4
- You can fax it or apply through a third-party provider like FormLLC
Some states like Wyoming and Delaware are popular for international founders due to their business-friendly laws.
How to Get an LLC in Any U.S. State
Forming an LLC involves:
- Choosing a name
- Selecting a Registered Agent
- Filing Articles of Organization
- Paying the state filing fee
- Drafting an Operating Agreement
- Complying with annual reporting rules
At FormLLC, we help you do all of this in any state — stress-free.
How to Apply for an EIN After LLC Approval
Once your LLC is approved:
- Visit irs.gov
- Navigate to the EIN application section
- Choose “Limited Liability Company” as your entity
- Enter the name exactly as it appears on your Articles
- Submit and download your EIN Confirmation Letter (CP 575)
Non-residents: Submit Form SS-4 by fax or mail
Operating Agreement and Its Role
While not legally required in all states, the Operating Agreement is often requested when:
- Opening a bank account
- Applying for loans
- Applying for licenses
It outlines ownership, voting rights, profit sharing, and more.
Common Myths About EIN vs LLC
Myth 1: You need an EIN first
Fact: Always form the LLC first.
Myth 2: EIN proves your business is legal
Fact: Only LLC approval from the state does that.
Myth 3: EIN is the same as an LLC
Fact: EIN is a federal tax ID. LLC is a legal entity.
Can I use an EIN I got as a sole proprietor for my LLC?
No. You’ll need a new EIN.
Is it free to get an EIN?
Yes, the IRS provides EINs at no cost.
What if I already got an EIN with the wrong name?
You’ll need to cancel it and reapply.
How long does it take to get an EIN?
Online: Instant for U.S. residents.
Non-residents: 3–5 business days via fax
Can I use my SSN instead of an EIN?
Only for sole proprietorships. LLCs require an EIN.
Final Thoughts: Avoiding Costly Mistakes
Forming a business the wrong way can cost you:
- Lost time
- Rejected bank applications
- IRS delays
- Confusing tax filings
- Legal headaches
The correct order is simple:
LLC first. EIN second.
This ensures compliance, smooth banking, and a professional business setup from day one.
Let FormLLC Help You Set Up the Right Way
At FormLLC, we handle your entire business setup — in the right order:
LLC Formation in any U.S. state
EIN Application (express delivery)
BOI Reporting (new for 2025 compliance)
Registered Agent (free for 1st year)
U.S. Address with Mail Forwarding
U.S. Bank Account Guidance
Business Website, Email & Phone
Email: contact@formllc.us
Website: www.formllc.us
WhatsApp: +91 6202619173
