LLC: EIN number, do I need one?

[netl40]

Hello,

I am still deciding between a single or multi-member LLC, and may post a separate question about it... but for now I am wondering about EIN numbers.

When I form a Single Member LLC, do I need to get an EIN, or do I just use my own SS# when opening a bank account, etc.?

Even if I don't need an EIN, can I get one anyway, or are there repercussions I should be aware of?

Thank you,

[tycoonlogan]

I'd recommend getting an EIN unless you have a pretty good reason not to... It's a very, very easy process to get one.

[netl40]

Does getting an EIN complicate taxes?

Under a Sole Proprietorship, if I under stand things right, I would just report business income on my own tax return...

When start the LLC, if i get an EIN, will I have to now file a separate return?

[BusinessAdviser]

You need to get an EIN, and the reason is that you want to make sure that you're keeping personal and business expenses separate. Let's say you operate your business as an LLC but open the bank account under your own SSN. The result may be that you unknowingly "pierce the corporate veil" and lose your limited liability status because you're conducting business through your own bank account. Get an EIN.

[dmetcalf50]

My first company was a single member LLC and I had an EIN for my business accounts and then a sole proprietor tax id number for myself because your taxed as a sole proprietor.

If you have a multi member LLC you can still choose to be taxed as a pass through LLC and not face corporation taxes or you if you want you can be taxed as a corporation. Most commonly people choose pass through.

If your not going to get an EIN, what's the point of even filing for an LLC? It super easy to get one.

[tycoonlogan]

Oh, I forgot to post earlier... If you plan on having employees, you must have one.

[rokwu2]

just search for form ss-4 and the second sheet of the application contains information about who is and who is not required to get a EIN

[netl40]

OK, so I need an EIN.

Next Question:

Since I want to use pass-through taxation, do I still just report the profit/loss from the LLC on my own Schedule C or do I need to file a separate return for the LLC's EIN?

[netl40]

My first company was a single member LLC and I had an EIN for my business accounts and then a sole proprietor tax id number for myself because your taxed as a sole proprietor.

Can you clarify that... I don't quite understand. (I am very new to taxes...)

[BusinessAdviser]

My first company was a single member LLC and I had an EIN for my business accounts and then a sole proprietor tax id number for myself because your taxed as a sole proprietor.

This is not necessary, and probably not even a good idea. You should have an EIN for your LLC, but then no "sole proprietor tax ID number," since you are not a sole proprietor, nor are you taxed as a sole proprietor. You're taxed as an individual owner of an LLC. The last thing you want to do is start creating confusion over whether you're operating as an LLC or a sole proprietorship. EIN for the LLC, that's all. The earnings are simply reported on your personal income tax.

[dmetcalf50]

Sorry to say your wrong completely wrong Advertise Here.

The IRS never made a new tax classification for a LLC. Instead IRS uses tax entity classifications it has always had for business taxpayers. Corporations, Partnerships, and Sole Proprietors. This means that an LLC is always classified as one of these types of taxable entities.

So a multimember LLC can be taxed as a pass through LLC or a Corporation. It is most common that a multimember LLC is taxed as a pass through though which would be equivalent to being taxed as a sole proprietor.

If your a single member LLC (SMLLC) you can be taxed either as a corporation or a single member "disregarded entity".

If you are a single member LLC you don't need to use your EIN for any tax reasons. If you are a single member LLC taxed as a "disregarded entity" and don't have any and are not planning on hiring any employees you really don't even need an EIN. Now to open a bank account you typically need an EIN so that's usually the reason you get one.

So to clarify advertisehere, this is necessary and this is a good idea. You should have an EIN because it won't hurt and you will most likely need it to open a bank account. You are taxed as a sole proprietor because a SMLLC not taxed as a corporation is known as a "disregarded entity" and an individual owner of an SMLLC can either be taxed as a corporation or "disregraded entity" (Sole Proprietor). So, by not getting a sole proprietor tax ID number would cause confusion. Completely opposite of what advertisehere said.

Now, if you choose to be taxed as a corporation you will need to file Form 8832 and elect to be classified as a corporation.

[BusinessAdviser]

That's wrong. A sole proprietor doesn't need a tax ID number. If you go sell lemonade on the corner, you are a sole proprietor. You're income should be reported on your individual income tax filing. As you mentioned correctly, you SHOULD get an EIN for your LLC because you want your bank account created in the LLC's name, and they will require an EIN. Failure to do this could cause a loss of your LLC's limited liability status.

(Also, a single-member LLC MIGHT ACTUALLY need an EIN if it has any employees, for example.)

However, again, a sole proprietor does NOT need a separate ID number (and following such, a member of an LLC does not need a separate ID number). That is just wrong. So as the owner of an LLC, get an EIN for your LLC to help prevent comingling, and you're fine. You'll use your SSN and report your portion of your LLC's earnings on your income tax filing.

Dmet, please read up:

"Q: Does a small company need a tax ID number?

A: A sole proprietor who does not have any employees and who does not file any excise or pension plan tax returns is the only business person who does not need an employer identification number. In this instance, the sole proprietor uses his or her social security number as the taxpayer identification number."

Source: IRS: http://www.irs.gov/faqs/faq-kw180.html;
See also Employer Identification Number (EIN) FAQ - Small Business

[BusinessAdviser]

As a note, be careful telling people they are "wrong ... completely wrong," unless you know what you are talking about and know that they are wrong.

In this case, telling someone that, asserting that you are right and they are wrong when the truth is actually the opposite (at least according to the IRS), makes you look both ignorant AND self-righteous. Never a good way to come across in business.

(Again, a sole proprietor does not get a "sole proprietor tax ID number," but rather simply uses his or her social security number, although it is typically wiser, if not necessary, to get an EIN for any legal entity created, such as an LLC or corporation.)

[dmetcalf50]

I know what I'm talking about.

Maybe instead of being ignorant you should find out yourself. Atleast according to the IRS, Single Member Limited Liability Companies

I'm giving him correct information, it's usually not a good way to come across giving someone false information.

When I set up my LLC, it was a single member LLC not taxed as a corporation. I use to EIN for my business and I was giving a sole proprietor number for myself. In this case I do not operate as a sole proprietor, but an LLC. When it comes to taxes because the IRS never made a new classification for a LLC, my personal taxes use a TIN to be taxed as a sole proprietor and this number is not my SSN.

[BusinessAdviser]

Look, you're confusing everything, and that just goes to show further that you should probably get a good understanding of what you're advising others on before doing so.

Here's the rundown:

The IRS requires that each income-tax filing have a TIN, or Taxpayer Identification Number, whether the taxpayer be a natural person (individual) or legal person (entity). This is to allow the IRS to properly keep track of each taxpayer.

However, there are different types of TINs. For example, if you are an entity with employees, your TIN will be an Employee Identification Number, although you needn't have employees to request an EIN, as in the case of an LLC. If you are a sole proprietor, partner, or single-member limited liability company (SMLLC) without an EIN, however, your TIN will be your SSN. Okay? TINs encompass both EINs and SSNs.

Now that we have an understanding of what a TIN is, we can move on to which type of TIN is necessary. Typically, entities use EINs and individuals use SSNs. However, in the case of a SMLLC, because it's a pass-through entity (almost always), you can have an EIN for the sake of the business's operations, but when it comes to reporting taxes, you'll report your own earnings from the LLC using your SSN.

Dmet, to refer to your own source, "An SMLLC that is a disregarded entity and does not have or will not have employees does not need an EIN. It should use the name and TIN of the single member owner for federal tax purposes. However, if a SMLLC, whose taxable income and loss will be reported by the single member owner, nevertheless needs an EIN to open a bank account or if state tax law requires the SMLLC to have a federal EIN, then the SMLLC can apply for and obtain an EIN. If the SMLLC has no employees, it will not use this EIN for any federal tax reporting purpose."

So, let's all read though it again, now that we all understand. What it's saying is that an EIN is not necessary for an LLC where there are no employees (to simplify), as we've already established. Now, "It should use the name and TIN of the single member owner for federal tax purposes." The reason it refers to TIN here, is that the "single member owner" is not necessarily an individual. Rather, it could be another company. As such, the "TIN of the single member owner" could be either an EIN or, in the case of an individual, a SSN. See?

To say that you need "both an EIN and a TIN" would be like me telling you that I need you to go to the grocery store and pick up both an apple and a fruit. Or to a car dealership to get a Ford Explorer and an SUV.

Now, each state has different laws with regard to state taxation, but I believe we're all referring to federal law here, IRS requirements and rulings, since it would take a year to go through each state's laws.

I hope this makes more sense to everyone, whether the original poster, passive reader, or OTHER'S MISINTERPRETING POSTERS.