W9 Question: What happens if Single Member LLC EIN on form??

[davsea17]

I submitted a W9 with my Single Member LLC EIN on the form, with my name on the line 1 and business llc line two

However it should have been my personal number or EIN from sole prop. I believe.

What realistically happens? This was on Ebay for managed payments (1099 etc interview) and probably W9 

[KrisD15]

To clarify:

Are you saying you have a Single Member LLC AND sole proprietor?

Federal EIN is connected to the filer's social security number for a Schedule C filer. 

According to the IRS:

"If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN."

IRS W9

[Rick19744]

Let me summarize what you are saying and provide some input:

• You completed a form W-9 for eBay
• You have a SMLLC treated as a disregarded entity
• Based on the instructions to the W-9, you correctly used your individual name on line 1 and the business name on line 2
• You indicate that you used the EIN of your SMLLC in Part I
• Unless you have employees, you are not required to obtain an EIN, however, some taxpayer's obtain one so they don't give out their SS#
• The instructions to the W-9 Part 1 indicate that a disregarded entity can provide either the taxpayer's SS# or the SMLLC EIN if one was obtained.
• So based on the above, I believe you are okay.  Just make sure you use the EIN on your Schedule C when filing your personal tax return

[AmeliesUncle · Accepted solution]

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@Rick19744 wrote:

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• The instructions to the W-9 Part 1 indicate that a disregarded entity can provide either the taxpayer's SS# or the SMLLC EIN if one was obtained.

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I read it very differently.

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.

https://www.irs.gov/pub/irs-pdf/fw9.pdf

[Rick19744]

The parens indicate you can use an EIN if the owner has one.

I believe you are fine.

[AmeliesUncle]

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@Rick19744 wrote:

The parens indicate you can use an EIN if the owners has one.

I believe you are fine.

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Yes, if the OWNER has one (EIN in the name of the individual person), that can be used.

[RyanCScott]

I found this thread when I was searching about how to fill out a W9 as a single member LLC. I called, and the IRS said that a single member LLC's EIN can be used on a W9 even though the instructions say not to. They admitted that it's confusing. You don't need to get a separate EIN or use your SSN.

[AmeliesUncle]

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@RyanCScott wrote:

 I called, and the IRS said 

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Unfortunately, it is very common to get different answers from different IRS employees.  

I'm not sure why you would ignore the printed instructions (carefully written and checked) and listen to some random employee at the IRS.

[RyanCScott]

@AmeliesUncle: I'm always going to go with the answer from the organization itself and not the internet, but there are a few reasons why I was wondering about this. I only have an LLC EIN, and the instructions all sound like you can't go back and get a sole proprietor EIN if you already have one. I want to do business through my LLC and have that information be consistent on everything, and that's what the IRS confirmed. You have to put your LLC info and EIN on your taxes, so it doesn't make sense to use a different sole proprietor EIN on your W9. I'm not giving out my SSN.

I've seen people say that they use an old sole proprietor EIN from before they started their LLC, but using different EINs on your taxes and W9 forms seems like it could cause issues. No one that raises that issue online seems to get an answer about it. The IRS said that filing your LLC EIN on your Schedule C confirms that it's you. I expected to be on the phone all day, but they call you back if you leave a number. I plan to call again with some other questions, and confirm this one. My accountant also confirmed this. Calling for clarification is always the best option.

[AmeliesUncle]

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@RyanCScott wrote:

I'm always going to go with the answer from the organization itself

 the instructions all sound like you can't go back and get a sole proprietor EIN if you already have one.

The organization itself created the Instructions.  You merely talked to an employee that may or may not know what they are talking about.

If you as an Individual/Sole Proprietor don't have an EIN, you certainly can get one.  The fact that you have an LLC that has an  EIN has no effect on YOU getting one for yourself.

[RyanCScott]

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@AmeliesUncle wrote:

The organization itself created the Instructions.  You merely talked to an employee that may or may not know what they are talking about.

If you as an Individual/Sole Proprietor don't have an EIN, you certainly can get one.  The fact that you have an LLC that has an  EIN has no effect on YOU getting one for yourself.

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Yes, it created the instructions. I called the organization, and the employee spent a long time on the phone verifying their advice after they agreed that their instructions are confusing. Whenever someone has questions about their business, the best advice you can give is for them to talk to a professional. I talked to the IRS and an accountant. Both agreed that that using my LLC's information is correct. It's tied to my SSN and reported on my taxes. I have no reason to believe that the internet knows better, but I will be getting more clarification.

My issue is that you can do business as both a SMLLC, and side work as an individual. If you give all clients your sole proprietor EIN, your clients see you as doing business only as a sole proprietor. They aren't doing business with an LLC. Also having a sole proprietor EIN on W9s but not on your taxes seems like it can cause issues. I want all information to be consistent on all documents.

[RyanCScott]

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@AmeliesUncle wrote:If you as an Individual/Sole Proprietor don't have an EIN, you certainly can get one.  The fact that you have an LLC that has an  EIN has no effect on YOU getting one for yourself.

The IRS said that I don't need to get a separate EIN, but I looked through the online application. It says that the sole proprietor EIN is for doing business if you aren't incorporated or registered with the state as an LLC. I'm doing business under my LLC. I'm wondering how people who use an old sole proprietor EIN are able to show that they do business with their clients under their LLC. It seems like they might as well not have one.

The application also says that a sole proprietor can have only one EIN "regardless of the number of businesses you own or operate". It also asks for reasons for getting a sole proprietor EIN, and none of them apply when I already have an LLC. From what I'm reading, each EIN is for a separate business. These are questions that I want a professional to answer.

[AmeliesUncle]

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@RyanCScott wrote:

It says that the sole proprietor EIN is for doing business if you aren't incorporated or registered with the state as an LLC. I'm doing business under my LLC.

The application also says that a sole proprietor can have only one EIN 

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That is interesting that the application says that.   That in not in harmony with the W-9 Instructions or what I've read in the Regulations about an LLC.

While it is fine line, the sole proprietor (you) is different than the LLC (even though the LLC is taxed as 'you').  For example, if you sold the LLC to somebody, that other person would keep the EIN because it belongs to the LLC, not you.   Or if another person became co-owner of your business, it would be taxed as a Partnership.  The LLC would keep its number, even though it isn't only 'you'.

[RyanCScott]

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@AmeliesUncle wrote:That is interesting that the application says that.   That in not in harmony with the W-9 Instructions or what I've read in the Regulations about an LLC.

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There's the confusion that I'm talking about. When the instructions aren't clear and you have questions, you have to ask someone for clarification. Employees at any organization (especially with the government) have a responsibility to give you accurate information. If it's conflicting, keep asking until you get a solid answer. I understand the issue though - it can take years for an organization like the IRS to update all of their instructions across every form, so they can conflict.

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@AmeliesUncle wrote:

While it is fine line, the sole proprietor (you) is different than the LLC (even though the LLC is taxed as 'you').  For example, if you sold the LLC to somebody, that other person would keep the EIN because it belongs to the LLC, not you. 

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That's exactly why I don't think it's a good idea to give a sole proprietor EIN to your clients if you mean to do business with them as an LLC. The EINs are separate. If the documents that a client has on file show that they're doing business with you as a sole proprietor, you have no protection. They could go after your personal assets.

I think the IRS is just trying to get individuals to use their SSN with the W9 instructions. It probably makes it easier for them to identify you. They don't care about any legal issues that can come with giving your personal information to a client. If there ever is an issue with putting your LLC info on a W9, both you and the IRS have the documents showing that it's your LLC. I think people are making a mistake by using a sole propretior EIN, and signing up for one when you already have an LLC doesn't look like it's allowed.

[AmeliesUncle]

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@RyanCScott wrote:

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Employees at any organization (especially with the government) have a responsibility to give you accurate information. 

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That's exactly why I don't think it's a good idea to give a sole proprietor EIN to your clients if you mean to do business with them as an LLC.

I think people are making a mistake by using a sole propretior EIN, and signing up for one when you already have an LLC doesn't look like it's allowed.

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LOL.  Apparently you don't have much experience with calling the IRS.  It is common to call three times and get three different answers.

The IRS directs you to do that.  From an income tax viewpoint, the LLC does not exist.  As I've pointed out twice before, yes, an EIN in your name is completely different than an EIN in the LLC's name.

I've seen the IRS send out mismatch notices for not following the directions on the W-9, such as using the LLC's EIN and your name on line 1.