Do I Get My LLC or My EIN First? The Mistake-Proof Formation Path
This article provides general information for educational purposes only. It is not legal advice, does not create an attorney-client relationship, and should not be relied upon as a substitute for consultation with a qualified attorney. Laws vary by state, and individualized guidance is recommended.
Form your LLC before applying for an EIN to avoid banking issues, IRS record mismatches, and unnecessary delays. Learn the correct order of operations for a smooth business launch.
Disclaimer This article provides general information for educational purposes only. It is not legal advice, does not create an attorney-client relationship, and should not be relied upon as a substitute for consultation with a qualified attorney. Laws vary by state, and individualized guidance is recommended.
You’re ready to launch, the documents are open on your screen, and then the doubt hits: Do you file with the state first, or get your tax ID from the IRS? It’s the most common “chicken-and-egg” question in business formation.
You need an Employer Identification Number (EIN)—also known as a Federal Employer Identification Number (FEIN)—to open a business bank account, but you need a legally formed business before obtaining that number.
Following the correct order helps prevent IRS record mismatches, banking delays, and unnecessary administrative headaches.
The Verdict: Why Your LLC Must Come First
You should form your LLC before applying for an EIN.
According to IRS guidance, an LLC is a business entity created under state law. Your company must legally exist before the IRS assigns it a federal tax identification number.
Forming your LLC first ensures:
- Your business name has been approved.
- Your official formation date is accurate.
- Your IRS records match your state records.
- Banks can verify your business without discrepancies.
LLC First vs. EIN First
LLC First | EIN First |
|---|---|
State approves business name | Name could later be rejected by the state |
IRS records match state records | Risk of IRS/state mismatch |
Easier banking process | Possible account delays or rejection |
Correct legal formation date | May require IRS corrections later |
Recommended approach | Only appropriate in limited situations |
State approves business name
Name could later be rejected by the state
IRS records match state records
Risk of IRS/state mismatch
Easier banking process
Possible account delays or rejection
Correct legal formation date
May require IRS corrections later
Recommended approach
Only appropriate in limited situations
Why the Order Matters: Federal Rules vs. Banking Reality
The IRS may technically allow you to apply early, but banks and state agencies expect your business information to match across every document.
The Secretary of State Is the Gatekeeper
Imagine obtaining an EIN for Acme Marketing LLC, only to have the Secretary of State reject that name because another business already uses something similar.
You now have a federal tax ID associated with a business name that legally doesn’t exist.
Correcting the mismatch often requires written correspondence with the IRS.
The IRS Requires Your Formation Date
When applying for an EIN, the IRS requests your business formation date.
Without state approval, you may not know the official effective date of your LLC, increasing the likelihood of inconsistent records.
Banking and KYC Compliance
Banks verify that your:
- EIN confirmation,
- Articles of Organization,
- Operating Agreement, and
- Business name
all match exactly.
Even small differences in punctuation or wording may delay account approval.
Pro Tip: You don’t need to wait for the IRS to mail your confirmation letter. Once you receive your EIN online and download the confirmation, you can generally begin opening your business bank account.
The “Mistake Recovery” Kit: I Already Got My EIN First
If you obtained your EIN before your LLC was officially approved, don’t panic.
Compare the name on your EIN confirmation with your state-approved formation documents.
If they differ:
- Identify every discrepancy.
- Notify the IRS to close the incorrect business account.
- Apply for a new EIN using your approved LLC information.
In many cases, you can apply for the correct EIN immediately after receiving your approved Articles of Organization without waiting for the IRS to process the cancellation.
Exceptions to the Rule
Although the general recommendation is to form your LLC first, there are several situations worth understanding.
Sole Proprietors Transitioning to an LLC
If you already operate as a sole proprietor with an existing EIN, the IRS may permit continued use of that EIN in certain situations.
However, many business owners prefer obtaining a new EIN for the LLC, especially if they later elect S corporation taxation.
Community Property States
Married couples in community property states such as California, Texas, and Arizona may qualify for special tax treatment that simplifies filing requirements.
Foreign Founders
Non-U.S. residents generally must:
- Form the LLC with the state first.
- Complete IRS Form SS-4.
- Apply by fax or mail if they cannot use the online EIN application.
The state formation documents remain the starting point.
Professional Formation Timeline
Following a structured sequence minimizes delays.
Day | Action |
|---|---|
Days 1–2 | Search your desired business name |
Days 3–5 | File Articles of Organization |
Day 6 | Receive state approval |
Day 7 | Apply for your EIN through the IRS |
Day 8 | Draft your Operating Agreement |
Day 9 | File Form 2553 (if electing S corporation taxation) |
Day 10 | Open your business bank account |
Days 1–2
Search your desired business name
Days 3–5
File Articles of Organization
Day 6
Receive state approval
Day 7
Apply for your EIN through the IRS
Day 8
Draft your Operating Agreement
Day 9
File Form 2553 (if electing S corporation taxation)
Day 10
Open your business bank account
Anti-Scam Alert
Applying for an EIN directly through IRS.gov is completely free.
If a website claims you must pay a mandatory federal fee to receive an EIN, it is a third-party filing service rather than the IRS.
While formation companies may charge for filing assistance, the IRS itself does not charge businesses to obtain an EIN.
Conclusion
Getting the sequence right is one of the simplest ways to avoid unnecessary delays during business formation.
By forming your LLC first and obtaining your EIN afterward, you’ll keep your state records, IRS records, and banking documents aligned from day one.
Following this professional formation path reduces the likelihood of corrections, speeds up bank account approval, and provides a stronger legal foundation for your business.
Legal.com Liability Disclaimer
All content published by Legal.com is provided for general informational purposes only. It is not legal advice, does not constitute a legal opinion, and should not be relied upon as a substitute for consultation with a qualified attorney. No attorney-client relationship is created by reading this article, using Legal.com templates, or contacting Legal.com. Legal.com disclaims all liability for actions taken or not taken based on this publication.