Obtaining EINs for Single-Owner Disregarded LLCs to Enhance Privacy

With the upcoming deadline for millions of Beneficial Ownership Information (BOI) reporting requirements, getting an Employer Identification Number (EIN) for your single-member, disregarded LLC is a proactive step to enhance privacy and reduce the risks associated with reporting a Social Security Number (SSN) as the entities tax ID number.

While using an SSN may be practical for many single-member LLCs in the past for other obligations, BOI reporting could introduce new privacy concerns. Here’s why obtaining EINs for single-owner disregarded LLCs can be a smart choice to protect personal information in this evolving regulatory landscape. 

The Privacy Risks of BOI Reporting

For years, single-member LLCs classified as disregarded entities for tax purposes could use the owner’s SSN (or an EIN if owned by another entity) on tax forms and financial documents. However, the BOI reporting requirement, which mandates that entities report their beneficial owners FinCEN, introduces additional privacy considerations. This new federal database could potentially face issues, including database breakdowns or data breaches, especially during the peak filing period at year-end when millions of entities submit reports. 

Relying on your SSN for BOI reporting in this new system could be risky, as it exposes your most sensitive personal information to potential leaks. Using an EIN instead of an SSN could limit the exposure of your SSN and enhance your privacy protection. 

Benefits of Using an EIN for BOI Reporting

1. Enhanced Privacy and Security

An EIN protects your SSN from being entered into the FinCEN database. As the EIN is tied to your business, it creates a layer of separation between personal and business information, reducing the risk of identity theft if any information gets exposed. 

2. Lower Risk During High-Volume Reporting

With millions of entities expected to file BOI reports at year-end, FinCEN’s database could face scaling issues, as this new system likely hasn’t been fully tested under such heavy demand. Using an EIN minimizes the risk of your personal SSN being caught up in potential system glitches, data breaches, or other issues. 

3. Compliance with Evolving Regulations

As privacy regulations expand, having an EIN could make compliance with future requirements easier for single-member LLCs. 

How to Obtain an EIN for Your Single-Member LLC

Obtaining an EIN is simple, and the process can be completed online through the IRS in a few minutes. Here’s a quick guide: 

1. Determine Eligibility: You must have a valid Taxpayer Identification Number (e.g., Social Security Number or Individual Taxpayer Identification Number) to apply. Also, only those in the U.S. or U.S. territories can apply online. 
2. Complete IRS Form SS-4: If applying online, you don’t need to submit this form, but having it filled out will guide you through the questions. If mailing or faxing your application, you’ll need to submit Form SS-4. 
3. Choose an Application Method:
   Online (recommended): The IRS’s online application system is the quickest way to obtain an EIN and provides an EIN immediately upon completion.
   Mail: Send Form SS-4 to the IRS, and you’ll receive your EIN by mail in about 4-6 weeks.
   Fax: Fax Form SS-4 to the IRS, and you should get your EIN within 4 business days via fax. 
4. Answer IRS Questions: The application will ask about your business structure (e.g., sole proprietor, LLC, corporation), business activities, and reason for requesting an EIN.
5. Receive Your EIN:
   If applying online, you’ll receive your EIN immediately.
   For mail or fax applications, the IRS will send your EIN by mail or fax in the given timeframe. 
6. Keep the EIN Confirmation: Once you receive your EIN, save the confirmation letter or document. 

Final Thoughts on Getting EINs for Single-Owner Disregarded LLCs

Obtaining an EIN is a straightforward step that provides added privacy and security for single-member LLCs owned by individuals, especially in light of new BOI reporting requirements. By using an EIN instead of an SSN, business owners can better protect their personal information, reduce risk, and ensure smoother compliance with evolving regulatory requirements. Remember – entities formed in 2024 have 90 days from formation to file their initial BOI Report. New entities in 2025 and on only have 30 days. When applying for an EIN by mail, take note of the prolonged time it takes to receive. It will not change the initial report deadline.  

In an age of growing privacy concerns, having an EIN isn’t just a practical measure; it’s a valuable asset for safeguarding your entities — and your personal privacy.