So I'm finally getting my side hustle off the ground (LLC, solo owner, nothing fancy). I go to apply for an EIN on the IRS site and it's free. But every 'business formation' service I've looked at wants $250–$500 just to 'obtain' it for me. Am I missing something? Is there some secret paid EIN that gets you a golden ticket or is this just a ridiculous upsell?
EIN Fees
Why are companies charging hundreds of dollars to obtain an EIN?
It's an upsell. The IRS form takes like 5 minutes. They're charging for 'convenience' and hoping you don't Google it.
I used one of those services for my first LLC. Paid $300. Still kicking myself. The worst part is they just filled out the same free form I could have done myself. Lesson learned.
Not totally defending it, but some people are terrified of paperwork and taxes. For them, peace of mind is worth the fee. That said, hundreds of dollars is steep for something that's literally free.
Wait, is there any scenario where paying for an EIN makes sense? Like if you need it faster or something?
Nope. IRS gives it instantly online. No expedited option because there's nothing to expedite. The only 'faster' is if you pay a service to click the buttons for you, which is absurd.
I think the real scam is when they bundle it with a 'registered agent' or 'compliance package' that you don't need. The EIN itself is just the hook. $99 for EIN, then $199 for registered agent, then $99 for 'annual report filing assistance'... before you know it you're out $500 and you still have to file your own taxes.
Look at it from their side: they're not charging for the EIN, they're charging for the hand-holding. Some folks have never dealt with the IRS and get nervous. I don't think it's evil, just expensive convenience. Like buying pre-chopped onions.
Pre-chopped onions cost a dollar more, not $300 more. Bad analogy.
Fair. But you get the idea.
The ones that really get me are the 'EIN-only' serrvices. No LLC filing, no registered agent, just the form. And they charge $150. That's pure laziness tax.
Anyone else notice tyese services show up as ads when you search 'EIN'? That's how they get people. First result looks official until you scroll down.
Yeah, the ads are sneaky. I almost clicked one because it had 'IRS' in the description. Good to know I'm not crazy for thinking it should be free. I'll just do it myself this weekend.