As far as single-member LLCs go, the IRS is pretty good at letting the single-member LLCs choose how they will be classified as far as taxes go. Any LLCs that currently have two more owners have the option of being treated as a partnership or a corporation when it comes to taxes. While single-member LLCs are able to choose whether they want to be a corporation or to be disregarded as an entity and be considered a sole proprietorship by the IRS when tax time comes around. It is never a bad idea to request an EIN for your business whether it is a single-member LLC or not. Some banks require an EIN in order for you to open a business bank account and for you to secure most, if not all business loans. Having an EIN and a bank account that has been specifically created for your business can only help your business in the long run, this helps to make your business a real-life entity. This also helps to strengthen any claims to liability from employees or other issues that you might need protection from.
Single-member LLC is an entity that does not have any employees and does not have a tax liability. Therefore a single-member LLC does not need an EIN. What should be used is the name and the EIN of every single member that is the owner, and this will be used for all federal tax purposes. In the event that there is a single-member LLC in which their taxable income or taxable loss is potentially reported by a single-member owner that requires an EIN to open the bank account then the single-member LLC is able to apply for and to obtain an EIN from the federal government. Also in the event that the state in which the single-member LLC resides in, requires them to have a federal EIN number then case the single-member LLC can also apply for and obtain an EIN from the federal government.In the event that a single-member LLC has previously filed and paid their employment taxes under their name, and their name has an EIN number from the owner or employer, then this person will be required to pay taxes on that EIM number. If no EIN number was previously assigned to this single-member LLC then a new EIN number will be required in order to file and pay their taxes.
An EIN is required for the person to be able to exercise specific tax liabilities that have been imposed on or are required for taxes to be filed by them. New EIN numbers are required if a single-member LLC now has multiple owners or a new owner. If there is only one owner then the single-member LLC that is the owner will have to determine whether or not they need an EIN. Remember as previously mentioned, the state in which the single-member LLC resides will also be part of this decision on whether or not an EIN number is required in order to file your taxes. If your business is a corporation or an S corporation then you will also need an EIN number. The Number can also be used to obtain business credit or buying a car.
On the other hand, you will not have to obtain a new EIN number if any of these following statements pertain to you and your business situation. If you report income taxes for your business as a division of a corporation, as a branch of your cooperation, or any other entity of your corporation, and you’re single-member LLC does not have any employees, then you will not have to apply for a new EIN number from the federal government. If there is an existing partnership that has since converted over to a single-member LLC business then you will also not need a new EIN. If the Single-member LLC name or business location has changed you will also not need a new EIN. In the event that the single-member LLC already has an EIN and they choose to be taxed as an S corporation or as a regular corporation, or if the single-member LLC is new and there is only one owner then they will not need to request an EIN. Be aware that you are able to request an EIN for banking tax purposes and for state tax purposes however an EIN is not always required for federal tax purposes.
All owners of single-member limited liability companies or LLC’s, that used to be treated as a corporation when it comes to taxes are required to fill out either the IRS form 8832 which will cause them to be treated as a C corporation, or to fill out IRS form 2553 which allows them to be considered an S corporation as far as tax classification goes. All single-member LLCs that I have chosen to be taxed as an S corporation, has also chosen to pass all of their income or their losses to the members of the single-member LLC, therefore, causing the LLC to have zero income and zero losses as far as tax time is concerned. On the other hand, if you have chosen to tax your single-member LLC as a corporation then the LLC profits will then be taxed throughout the member’s personal tax return when filed and this will be filed as a Schedule C tax return. This causes the income from the single-member LLC to be combined and taxed with all of the other taxable income that has been earned by the member.
If you are a single-member LLC, and you do not file the IRS form 8832 or the IRS form 2553, then the IRS will just automatically treat your LLC as a disregarded entity and this will cause you to be taxed as a sole proprietor of a proprietorship when tax time comes around. If you end up having an LLC considered a sole proprietorship as far as doing business then you are not going to need a separate EIN. If you decide to hire employees or you are required to file separate tax returns then you will need an EIN.
If you have determined that you would like to apply for an employer identification number, whether you need one or not, it is easy to go online to apply for these things. You will first need to locate and fill out Form SS-4 with the Internal Revenue Service. It is best practice for a business to complete the application online so that you will immediately receive your EIN. A confirmation letter will also be sent out to the address which you provided on the application, this letter can be expected at a later date at your home or business address. As you were filling out these forms you will be asked multiple information about your business, the reason that you’re applying for an EIN, and just some information about your business purposes and needs. It is best if you have all this ready for you before you start the application so that it will take you less time in the long run. Running a business is a difficult job, it requires different forms of paperwork, different forms of order, and many other different issues that will come along throughout your business lifespan. It is important to walk through the necessary research and to get the proper information before, during, and after you begin a business, run a business, or end of the business. In closing, it is important for every proprietor to know the laws and to make sure that all the proper paperwork has been filed with the proper authorities in order to continue to make your business a legal entity in this world.