Starting a business doesn’t end with the filing of your articles of organization. It’s full of confusing paperwork and processes, including applying for an EIN, or employer identification number, and choosing a registered agent.
Registered agents are a big deal in the formation process and you can scarcely complete it without one. And you need an EIN for many aspects of business management. And while a registered agent and an EIN are two completely different things, the two intersect in the running of a business.
In this guide I’ll explain what a registered agent is, what an EIN is, who needs an EIN, and whether you can use a registered agent address on your EIN paperwork.
Can You Use a Registered Agent Address for EIN Registration?
Unfortunately, no. You’re required to list your company’s mailing address, and also your street address if it’s different from your mailing address.
If you list a responsible party on your EIN application, you can list their physical mailing address, rather than your business address. If you don’t know what constitutes a responsible person, I’ll explain that in another section.
What Is a Registered Agent?
A registered agent is an individual or business entity whose job is to receive mail, legal documents, and service of process at your registered agent’s address during normal business hours. Your registered agent will use either mail forwarding service or an online document management portal, like a virtual mail service, to get your mail and legal documents to you.
The really best registered agents also send out compliance alerts so that you won’t forget to file your annual report or miss other important compliance filing deadlines with the Secretary of State’s office.
If your business operates in more than one state, you’re legally obligated to have a registered agent in each of those states. You can accomplish this by designating multiple registered agents (one in each state or at each branch), or by hiring a national registered agent service so that you can use one company to meet your registered agent needs nationwide.
A registered agent is also known as a statutory agent or a resident agent. So, if you’re confronted with these terms for registered agent services on any of your paperwork, you’ll know that all three terms refer to the same business service.
What Happens If My Business Operates Without a Registered Agent?
In the event that a process server comes to serve your business entity with a service of process and your registered agent isn’t posted at your company address during regular business hours, the process server will deliver the legal service of process to the Secretary of State instead.
This is protocol. But when a government agency has your legal notices and business correspondence, you don’t. So you won’t have any idea your company is being sued, which isn’t a good position to be in.
These legal actions will still take place without you. This means you won’t be able to defend your business in court, or even be present for the proceedings, and the result could be a default judgment against your company.
Most business entities can’t legally operate without a registered agent, so if you miss a service of process, the Secretary of State can revoke your company’s good standing. This has immediate consequences for your business, like disqualification for business loans, prohibition from expanding to other states, and a total ban from doing business in your state.
Your business name reservation also becomes nullified when you lose your good-standing status. Your best bet is to quickly sort your legal troubles, but even then, if another business went through the proper legal channels to use your business name, you may not get it back.
If you own either a single-member LLC or multimember LLC, you’ll be extra vulnerable after losing your company’s good-standing status. It could even result in the governing agency in your state (usually the Secretary of State) initiating “administrative dissolution” against your LLC.
Administrative dissolution is when a government agency revokes a company’s legal authority to conduct business in the state due to its neglect in meeting legal obligations. Translation: If you don’t maintain a registered agent, a government agency can legally dissolve your LLC.
What’s more, most business owners form a multimember or single-member LLC to benefit from limited liability protection. Without that, a person suing your business could list your hard-earned money and legally-gained assets as compensation in the lawsuit.
Don’t think you’re safe if you don’t own an LLC, either. Any business entity that operates without a registered agent can face serious legal and financial consequences.
What Is an EIN?
An EIN is a nine-digit tax identification number that the IRS (Internal Revenue Service) uses to identify businesses. Your EIN is unique to your business. There are a handful of instances where businesses are required to obtain an EIN, like hiring employees or opening a business account.
Differences Between an EIN and Other Tax Identification Numbers
EINs and other tax numbers are used for different situations and for different business entities. “Tax ID number” is a broad term used by the Internal Revenue Service to cover several different tax numbers used to identify businesses. Here are four types:
- EIN: Any company that hires employees, such as a partnership, corporation, or limited liability company, uses an EIN to identify the business, as well as for tax purposes.
- Social security number (SSN): If you own a sole proprietorship, you can use your social security number on tax forms or to open a business bank account for your company.
- Individual taxpayer identification number (ITIN): If you’re a business owner in the United States and don’t have (or don’t want to use) a social security number, then you can use an individual taxpayer identification number in its place.
- Taxpayer ID number (TIN)
In the United States, all business owners that either hire employees or have more than one owner and meet certain criteria use EINs as their standard business tax identification number.
If your business doesn’t meet the criteria to use an EIN, then you can use a social security number or individual taxpayer identification number as an alternative tax ID number.
A sole proprietorship is the only type of business entity allowed to use a social security number as a tax ID number. This is because they don’t hire employees, so they don’t technically need an EIN or other ID numbers. Business owners that don’t have social security numbers, or who own businesses with headquarters in other countries, use individual taxpayer ID numbers.
Other businesses use either TINs or EINs to identify their businesses when tax season rolls around. These numbers tell the IRS which business they’re processing tax information for, and the numbers are only used to identify businesses — not individuals.
It’s important to note that the format for EINs is similar to social security numbers, so you should know the difference. Social security numbers are usually formatted like this: XXX-XX-XXXX, while EINs use this format: XX-XXXXXXX.
Differences Between EIN and TIN
All businesses that hire employees are issued taxpayer identification numbers. The difference between a TIN and an EIN is that the TIN is a general business identification number, while an EIN identifies a specific employer.
Examples of business entities that use TINs and EINs include corporations, sole proprietorships, government agencies, and nonprofits.
Differences Between EIN and FEIN
FEIN stands for “federal employer identification number.” An EIN is issued by the state and used to file state taxes, while an FEIN is issued by the federal government and used to pay federal taxes.
Another difference is that if you have an FEIN, you have the ability to sign up for the Electronic Federal Tax Payment System. It allows you to pay your taxes online or by phone, which is a convenient approach to filing tax returns that many business owners enjoy.
Do I Need an EIN?
If your company has hired employees and it’s one of the qualifying business structures, then by law it’s required to have an EIN. The IRS will require you to obtain an EIN if you own one of the following business entities:
- Limited liability company
- Corporation
- Nonprofit
- Partnership
Which Situations Require You to Have an EIN?
If you’re a contractor or own a sole proprietorship, you’re typically not required to have an EIN. However, you need an EIN if you do any of the following:
- Start a business (unless you’re establishing a sole proprietorship or are a contractor)
- Plan to hire employees
- Open a business account
- Change your business structure to a business structure that is required to have an EIN
- Use estate funds to create a trust
- Withhold non-wage earnings for a person who works in the US but isn’t a citizen
- Start a pension plan
- Are informed you’re required to have an EIN for IRS withholding requirements
- Establish a partnership or corporation
- Represent an estate that includes a business
- Manage an estate throughout probate court proceedings
- Are a local or state government agency
- Pay excise taxes to the federal government
- Have a business that offers pension plans, retirement plans, or profit-sharing options for your employees
- Upgrade your company to a multimember LLC — no matter how it’s taxed
- Start a single-member LLC that’s taxed as a C corporation or an S corporation
- Represent an estate and operating a business after the owner dies
Can I Use a Virtual Address for My EIN?
Yes! The IRS will allow you to use a virtual business address on your EIN paperwork.
What is a virtual address? It’s a physical address or actual address that you can use to set up a virtual mailbox for your business. With a virtual mailbox, the physical mail that’s sent to your company is scanned and uploaded to an online system where you can view and manage it, making mail delivery a completely online interaction.
A virtual address can give you a leg up in the industry because you can choose an address in a busy business district, which will lend more credibility to your business than a home address that indicates you’re operating out of your basement. The only real downside to using a virtual address is paying for it. But really, what doesn’t have fees these days?
This is different from a virtual office address or virtual office space. The difference is that a virtual office is set up so employees can come together to work with each other online, even from different countries. It’s not where your business mail is sent!
While the IRS does in fact allow you to use a virtual address for your EIN, in many states it’s not acceptable to use a virtual address as your address for your registered agent.
So if your business is based from home and you don’t want to list your home address on the public record for privacy reasons, it may not be a good idea for you to be your own registered agent in this instance. You could appoint a family member, employee, friend, or law firm instead, or opt to hire a registered agent service.
Conclusion
You’re not allowed to use your registered agent’s address on your EIN application, but you can choose a responsible person and use their address on the form, or list a virtual address, rather than listing your home address.
This is great news for many business owners because so many business entities and structures are required to obtain an EIN, but it’s not always ideal to list your personal information on the public record.
If you’d like to learn about other things you should take care of when starting your business, check out my guide on How to Start an LLC. And if you’d like to hire an LLC service to help with applying for an EIN on your behalf and forming your business for you, read the Best LLC Formation Services.
