For all these things I think just having an EIN is simpler.
You don’t even need that to start; you set up Capital One (for example) business accounts using your SSN. The EIN is just to avoid putting your personal SSN on invoices.
LLC matters if you think you’ll have liability risks.
>The EIN is just to avoid putting your personal SSN on invoices.
In order to do that, your LLC has to elect to be taxed as an S-corp, which requires it to file its own return. Worse, certain states and cities will impose a corporation tax on it.
Otherwise, if you retain disregarded entity status, you have to use your personal SSN for invoices. The corporation EIN is then mostly for employment tax purposes.
(Not actual tax advice)
"For example, if a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, Request for Taxpayer Identification Number (TIN) and Certification, the W-9 should provide the owner’s SSN or EIN, not the LLC’s EIN." [0]
You're the best kind of correct, but to be clear, for most income forms submitted to the IRS, the IRS prefers the proprietor file once as an individual and use their SSN.
I have an EIN for my Sole Prop consulting business, and no LLC. They are orthogonal concepts.
It’s really easy to get an EIN online without forming an LLC. This is sufficient for any sole proprietor business where you don’t need liability protection or employees.
No, it's not orthogonal. You don't get that benefit for an LLC. It's written on the W-9 form itself. Thus it's a reason why _not_ to have an LLC.
"If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN.
If you are a single-member LLC that is disregarded as an entity
separate from its owner, enter the owner’s SSN (or EIN, if the owner has
one). If the LLC is classified as a corporation or partnership, enter the
entity’s EIN" [0]
>>The EIN is just to avoid putting your personal SSN on invoices.
> In order to do that, your LLC has to elect to be taxed as an S-corp, which requires it to file its own return
I think your interpretation is wrong and you have stripped the context on your IRS advice you quoted, changing the meaning. At the start of the paragraph containing your quote, it says "For federal income tax purposes, a single-member LLC classified as a disregarded entity generally must use the owner's social security number (SSN) or employer identification number (EIN) for all information returns and reporting related to income tax."
IMO, this has has to do with how one files their income and/or report to the IRS - as a pass-through entity, the IRS expects the human behind the single-member to file the income under their own own SSN even as after are distributing invoices with their LLC's EIN. IANA(Tax)L
No, you're misreading it. Information returns in most cases is the W-2 you send out to your employees and file a copy with the IRS for their information. I've always said that, for employment tax purposes, you use the LLC's EIN.
The entire quote on the IRS's webpage: "For example, if a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, Request for Taxpayer Identification Number (TIN) and Certification, the W-9 should provide the owner’s SSN or EIN, not the LLC’s EIN.
For certain Employment Tax and Excise Tax requirements discussed below, the EIN of the LLC must be used. An LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below."
The original statement was SSN hiding for invoices, that's directly covered in the W-9 example. You can (have to) hide your SSN on W-2s, but not the W-9s you give to customers.
theptip · · focus · HN ↗
You don’t even need that to start; you set up Capital One (for example) business accounts using your SSN. The EIN is just to avoid putting your personal SSN on invoices.
LLC matters if you think you’ll have liability risks.
sam1714 · · focus · HN ↗
In order to do that, your LLC has to elect to be taxed as an S-corp, which requires it to file its own return. Worse, certain states and cities will impose a corporation tax on it.
Otherwise, if you retain disregarded entity status, you have to use your personal SSN for invoices. The corporation EIN is then mostly for employment tax purposes.
(Not actual tax advice)
"For example, if a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, Request for Taxpayer Identification Number (TIN) and Certification, the W-9 should provide the owner’s SSN or EIN, not the LLC’s EIN." [0]
[0] <a href="https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies" rel="nofollow">https://www.irs.gov/businesses/small-businesses-self-employe...
zrail · · focus · HN ↗
Anyone can get an EIN for their sole proprietorship business (just one, though) and use it on tax forms.
overfeed · · focus · HN ↗
zrail · · focus · HN ↗
[deleted] · · focus · HN ↗
[deleted]
theptip · · focus · HN ↗
I have an EIN for my Sole Prop consulting business, and no LLC. They are orthogonal concepts.
It’s really easy to get an EIN online without forming an LLC. This is sufficient for any sole proprietor business where you don’t need liability protection or employees.
[deleted] · · focus · HN ↗
[deleted]
sam1714 · · focus · HN ↗
"If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN.
If you are a single-member LLC that is disregarded as an entity separate from its owner, enter the owner’s SSN (or EIN, if the owner has one). If the LLC is classified as a corporation or partnership, enter the entity’s EIN" [0]
[0] <a href="https://www.irs.gov/pub/irs-pdf/fw9.pdf" rel="nofollow">https://www.irs.gov/pub/irs-pdf/fw9.pdf
theptip · · focus · HN ↗
yencabulator · · focus · HN ↗
overfeed · · focus · HN ↗
> In order to do that, your LLC has to elect to be taxed as an S-corp, which requires it to file its own return
I think your interpretation is wrong and you have stripped the context on your IRS advice you quoted, changing the meaning. At the start of the paragraph containing your quote, it says "For federal income tax purposes, a single-member LLC classified as a disregarded entity generally must use the owner's social security number (SSN) or employer identification number (EIN) for all information returns and reporting related to income tax."
IMO, this has has to do with how one files their income and/or report to the IRS - as a pass-through entity, the IRS expects the human behind the single-member to file the income under their own own SSN even as after are distributing invoices with their LLC's EIN. IANA(Tax)L
sam1714 · · focus · HN ↗
The entire quote on the IRS's webpage: "For example, if a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, Request for Taxpayer Identification Number (TIN) and Certification, the W-9 should provide the owner’s SSN or EIN, not the LLC’s EIN.
For certain Employment Tax and Excise Tax requirements discussed below, the EIN of the LLC must be used. An LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below."
The original statement was SSN hiding for invoices, that's directly covered in the W-9 example. You can (have to) hide your SSN on W-2s, but not the W-9s you give to customers.
yencabulator · · focus · HN ↗
1) Unless you only take card payments through e.g. Stripe, at which point your SSN information goes to Stripe not the client.
2) You can get a personal EIN, and then you don't need to share your SSN with your clients.