When Does a Joint Venture Need an EIN?

A joint venture is a business arrangement where two or more parties pool their resources to accomplish a specific task. This collaboration is temporary, existing for the duration of the project or a defined period. While the business concept is straightforward, the tax implications can be complex. A primary question for participants is whether their venture needs its own nine-digit Employer Identification Number (EIN) from the Internal Revenue Service (IRS) to identify it for tax purposes.

Determining the Need for an EIN

The requirement for an EIN hinges on the venture’s structure and activities, as the IRS does not formally recognize “joint venture” as a distinct entity type for tax purposes. The venture’s tax treatment is determined by its underlying legal structure. If the joint venture is organized as a separate legal entity, such as a partnership or a multi-member limited liability company (LLC), it is considered a new business and must obtain its own EIN to file required annual information returns.

Beyond its legal structure, a joint venture must have an EIN for specific operations. If the venture pays wages to one or more employees, it must have an EIN to report and pay federal employment taxes. An EIN is also mandatory if the business is required to file federal excise tax returns, which apply to businesses involved with certain goods or services like fuel, tobacco, or alcohol.

An exception exists for married couples who operate an unincorporated business together and elect to be treated as a “qualified joint venture.” This election allows them to avoid filing a partnership return, with each spouse reporting their share of business income and expenses on a separate Schedule C (Form 1040). In this scenario, an EIN is not needed for the business itself, provided it does not meet the other operational triggers that require one.

However, special rules apply if the business is a limited liability company (LLC). A married couple’s LLC can only take advantage of the qualified joint venture status if they live in a community property state. In all other states, an LLC owned by a married couple is treated as a partnership and must obtain an EIN.

Information Required to Apply for an EIN

To apply for an Employer Identification Number, you must gather specific information for Form SS-4, Application for Employer Identification Number. A current version of this form can be downloaded from the IRS website. You will need to designate a “responsible party,” who must be an individual with a valid Taxpayer Identification Number (SSN or ITIN) that controls the entity.

The application requires the following details:

• The exact legal name of the joint venture and its physical mailing address.
• The name and tax identification number of the designated responsible party.
• The entity type, such as partnership or multi-member LLC.
• A brief description of the principal business activity.
• The closing month of the accounting year, which for most new businesses is December.

The EIN Application Process

There are three methods to submit the completed Form SS-4. The IRS encourages using the online application, as it is the fastest method. By completing the application on the IRS website, a valid EIN is issued immediately upon successful completion of the session.

For those who prefer not to use the online system, application by fax is an alternative. You can fax the completed and signed Form SS-4 to the appropriate IRS service center. If you provide a return fax number, you can expect to receive the EIN in about one week, while processing takes approximately two weeks without one.

The third method is to mail the completed Form SS-4 to the designated IRS address. This is the slowest option, and applicants should allow four to five weeks for processing. Once assigned, the EIN is permanent for the life of the joint venture. You will receive an official notice confirming your new EIN, which should be kept with other business records for tasks like opening a bank account or filing taxes.