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Solved

When to use EIN or SSN for single member LLC?

Forum|Forum|6 years ago
June 3, 2019
3 replies
0 views

I had a business I ran as a sole proprietor for about 4 years that hadn't made too much and was not a problem to add to tax returns as it was only 1099-MISC income. It has since changed and is the main and only source of income for me. I registered the business as an single member LLC a year ago and requested an EIN a few months ago. I just submitted 2016 taxes using only my SSN, filing under a 1040 on the Schedule C, and did not include the EIN on there. The main reason I got the EIN was so that when I receive various 1099s the individuals and companies do not have my SSN. I must now submit quarterly tax payments which, since I filed under my SSN for 2016, shows that I must file quarterly with the SSN and cannot use the EIN. Should I forget about the EIN entirely, as the only point was to use it when individuals request a W9? Or can I still use it for that as it is connected to my SSN? I'm just afraid that if I pay my quarterly and annual tax returns with the SSN and use the EIN for individuals giving me a 1099, that could create a problem.

TurboTax Self Employed Online

Best answer by DS30

You will use your SSN since this is a disregarded entity. This applies to your quarterly estimated tax payments as well.

However, you can use either your SSN or EIN when receiving 1099-MISC income. Just make sure to report all these 1099-MISCs under your Schedule C since they all relate to your LLC business income.

Also you can use your EIN for your LLC when necessary like if purchasing property for your LLC or filing your Sales tax report with your state's Department of Revenue.

For more information see Single Member Limited Liability Companies

DS30Answer

Employee

You will use your SSN since this is a disregarded entity. This applies to your quarterly estimated tax payments as well.

However, you can use either your SSN or EIN when receiving 1099-MISC income. Just make sure to report all these 1099-MISCs under your Schedule C since they all relate to your LLC business income.

Also you can use your EIN for your LLC when necessary like if purchasing property for your LLC or filing your Sales tax report with your state's Department of Revenue.

For more information see Single Member Limited Liability Companies

alessiog

This is great information.

I am concerned because I have a rental properties and I need to start issuing 1099-MISC to contractors with whom I spend more than $600 per year. My understanding is that this is necessary in order to take advantage of the new pass-through 20% deduction.

I set up a LLC for the last property I purchased. So, I can use the EIN for the LLC to issue the 1099-MISC, right?

Can I use the same EIN even if the properties were not purchased under the LLC but are all under my name?

I am trying to avoid giving out my SSN.

Thanks.

Carl11_2

Employee

I just submitted 2016 taxes using only my SSN, filing under a 1040 on the Schedule C, and did not include the EIN on there.

Doesn't matter. Remember, *ONLY* the IRS issues EINs. When you requested the EIN you had to provide an SSN for the IRS to tie that EIN to. So it *does* *not* *matter* which you use when dealing with the IRS. THe IRS *knows* what SSN the EIN belogs to, and you and the IRS are the only ones who need to know what SSN your EIN is tied to.

The main reason I got the EIN was so that when I receive various 1099s the individuals and companies do not have my SSN.

Actually, that's the *only* reason to have an EIN, and it's a very important reason to have it. If your EIN gets abused the only thing affected is the business. But if your SSN gets abused, it can destroy your entire life.

I must now submit quarterly tax payments which, since I filed under my SSN for 2016, shows that I must file quarterly with the SSN and cannot use the EIN.

Not true by any stretch of the imagination. LIke I said, the IRS knows "exactly" what SSN that EIN is tied to. No, it's not a "MUST" that you file with your SSN either. You can use either. I"ve had some quarters where I'ved filed with the SSN, and other quarters with the EIN. It *does* *not* *matter* and is not a problem or issue for the IRS.

Should I forget about the EIN entirely, as the only point was to use it when individuals request a W9?

If the W-9 is being requested by a business client, then why on earth would you give them your SSN when you have an EIN? There is no reason on this green earth why anyone needs my SSN when I have an EIN. They get my EIN only, or they can take their business elsewhere. If that's a problem for them, then that's exactly what is....."THEIR" problem. Not mine.

I'm just afraid that if I pay my quarterly and annual tax returns with the SSN and use the EIN for individuals giving me a 1099, that could create a problem.

Your fears are based on no facts what-so-ever and are completely misfounded and untrue. But under no circumstances and with no exceptions should you "EVER" give your SSN to anyone for any reason when you have an EIN. There are no valid exceptions either. When running a business, there are only two business clients who have a legal requirement for your SSN instead of your EIN. That would be the IRS, (since they need it to issue the EIN) and any other taxing authority that taxes your personal income (such as your state and possibly your county if your business is required to be licensed below the state level.)

cparke3

Employee

Ok, this is common sense, however the IRS instructions for Form W-9 are very confusing:

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). Do not enter the disregarded entity’s EIN.

Thus, it seems IRS only wants the Disregarded LLC's EIN to be used for excise tax and employer-related tax returns like Form W-2, but not for Form 1099!

Yet, when you look at the Form SS-4 instructions, IRS provides a more detailed explanation to this effect, however it also is kind of waffling on the subject. See the underlined last sentence below:

Taxpayer Identification Number

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. 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. Most new single-member LLCs classified as disregarded entities will need to obtain an EIN. An LLC applies for an EIN by filing Form SS-4, Application for Employer Identification Number. See Form SS-4 for information on applying for an EIN.

A single-member LLC that is a disregarded entity that does not have employees and does not have an excise tax liability does not need an EIN. It should use the name and TIN of the single member owner for federal tax purposes. However, if a single-member LLC, whose taxable income and loss will be reported by the single member owner needs an EIN to open a bank account or if state tax law requires the single-member LLC to have a federal EIN, then the LLC can apply for and obtain an EIN.

My point is, if you can use the LLC's EIN for state tax law and a bank's Form 1099-INT, why can't it also be used by other businesses on Form 1099-MISC? It seems really wrong that I'd need to use my older sole proprietor EIN for others to report their payments to my disregarded LLC even when it already has its own EIN!

I also really wonder, as was just described in this thread, since IRS in the back-end has the LLC's EIN linked to a responsible party's EIN or SSN, what really would happen if the disregarded LLC's EIN is used on a Form W-9 and Form 1099-MISC despite IRS's instructions?

ReneeM7122

The reason that a Single Member LLC (SMLLC) is required to use the SSN of the owner is because of backup withholding. If the legal name and Taxpayer Identification Number (TIN) that the IRS expects to be associated with the reporting do not match their database, a red flag will go up. Think of the W-9 form as a map. The W-9 ties into the 1099-MISC because that is the form that reports amounts paid to an independent contractor. Interest payments are not the same as services performed, and they don't fall under the same category.

SMLLCs are considered disregarded entities separate from their owners, as you know. This is because the IRS expects the taxpayer to carry the income onto his or her personal tax return. For this purpose, it's irrelevant whether the LLC uses its own EIN for banking. Imagine you are going to the airport to catch a flight. It doesn't matter if you are representing your business or if it's a personal vacation- you need to show your driver's license and not your Articles of Organization to get on the plane.

Form W-9 asks for the Name as shown on your tax return on line one, and the Business Name / Disregarded Entity name on line two. Line two makes it clear to the IRS that there is another EIN out there being used in banks, for example. If the disregarded LLC's EIN is used on Form W-9 line one and on Form 1099-MISC, then nothing will happen to you when you file your tax return; however, the IRS could potentially inform the withholding agent that they are required to collect a B Notice from you to correct the information. The next step is backup withholding.

@cparke3

Kandyrob

One of my businesses used my ssn but it’s a 1099 can I file with the ein. This is first time filing I don’t want to file with my ssn.

JamesG1

Have you received a 1099 and want to file it under an EIN? Do you have an EIN assigned to your LLC? Please clarify.

This IRS website states:

For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and affirmatively elects to be treated as a corporation.

The LLC is a disregarded entity unless you have filed IRS form 8832 and affirmatively elect to be treated as a corporation.

If the LLC is a disregarded entity, that means that you file the income on Schedule C of your personal Federal 1040 tax return and report the EIN number on Schedule C.

@Kandyrob

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Kandyrob

Thank you so much for responding. Yes I get a 1099 as a broker, and I have an llc and ein already for it. Can I file with my llc and ein even if they used my ssn in the 1099?