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How to form an LLC and get an EIN as a contractor

Lots of contractors start as "just me and a truck." At some point, you want the business to be its own thing. For many, that means forming an LLC and getting an EIN.

This guide covers what those are, the usual order, and where to go. Rules vary by state, so treat this as a map, not the final word.

What an LLC is

A limited liability company (LLC) is a business structure created under state law. Each state has its own rules, so you check with your state (IRS: Limited liability company).

  • Owners of an LLC are called members.
  • Most states allow single-member LLCs, with one owner (IRS).
  • The SBA says an LLC protects owners from personal liability in most instances, and that LLC members are considered self-employed and pay self-employment tax (SBA: Choose a business structure).

"In most instances" matters. What an LLC protects, and how far, is a question for your attorney.

How the IRS treats an LLC for taxes

By default, the IRS treats an LLC based on how many members it has (IRS):

  • One member: treated as "disregarded" from its owner for income tax, unless it elects to be a corporation on Form 8832.
  • Two or more members: treated as a partnership, unless it elects to be a corporation on Form 8832.
  • Even a single-member LLC is treated as a separate entity for employment tax and certain excise taxes.

An LLC can also be taxed as an S corp, which requires filing Form 2553 with the IRS (SBA: Register your business). Whether that makes sense for you is a CPA conversation.

Step 1: Form the LLC with your state

The IRS says to form your LLC through your secretary of state before you apply for an EIN, or your EIN application may be delayed (IRS: Get an EIN).

According to the SBA (Register your business):

  • Most states register businesses through the Secretary of State's office or a business agency.
  • An LLC needs a registered agent in the state before filing. The agent receives official papers for the company.
  • The main filing is usually called articles of organization.
  • An operating agreement is widely recommended, even where a state doesn't require one.
  • If you work in more than one state, you may need foreign qualification in the other states.

Contractors often cross state lines. If you do, ask about foreign qualification early.

Step 2: Get your EIN from the IRS

An EIN is your business's federal tax ID number. You can apply online, directly with the IRS (IRS: Get an EIN).

What the IRS says about the online application:

  • The IRS does not charge a fee for an EIN. Beware of websites that charge you for one.
  • You need the responsible party's Social Security number or ITIN, and your entity type.
  • Finish in one session. It times out after 15 minutes of inactivity.
  • One EIN per responsible party per day.
  • If approved, the EIN is issued right away online. Print the confirmation letter.

The IRS says you generally need an EIN to hire employees or to run a partnership or corporation, among other reasons (IRS). The SBA adds that you'll use it to open a business bank account and apply for licenses (SBA: Tax IDs).

Step 3: Check state tax IDs, licenses and reporting

  • State tax ID: depends on your state's income and employment taxes. Check your state's revenue department (SBA: Tax IDs).
  • Licenses and permits: the SBA lists construction among activities commonly regulated by states and localities (SBA). Check your state, county and town.
  • Beneficial ownership: FinCEN says companies formed in the US are exempt from beneficial ownership reporting. Rules can change, so check FinCEN.gov/boi.

Step 4: Open a business bank account

Once you have your EIN, open a separate business account. We cover that in opening a business bank account.

Where Banay OS fits

Banay OS™ isn't a formation service. It's where the work gets tracked once you're up and running. Crew clock in from their phone, receipts are filed to the job, and each job gets its own P&L. Join the early-access waitlist, see plans or visit the Banay OS home page.

FAQ

Do I form the LLC or get the EIN first?

The IRS says to form your LLC through your secretary of state first, then apply for the EIN (IRS).

Does the IRS charge for an EIN?

No. The IRS says you never have to pay a fee for an EIN (IRS).

How is a one-person LLC taxed?

By default, the IRS treats it as disregarded from its owner for income tax, unless it elects corporate treatment on Form 8832 (IRS). Ask your CPA what fits you.

Do I need a contractor license?

It depends on your state and town. Check with your state and local offices (SBA).

Sources (fetched Oct 21, 2026):