Single Member LLC in 2 different states electing S-Corp

[JPT335]

Hi All, hope you are all having a great Holiday. 

I am very confused as to the legalities and steps to take with regards to my business.

I currently have a single member LLC and EIN in NJ to practice physical therapy.  

I am opening a 2nd location in NY.  I am in the process of obtaining a PLLC in NY. 

The legal names for NJ/NY will be different, but the DBA names will be the same. 

1- Do I need a 2nd EIN for the NY location?  

2- Can I use my current EIN that was created in NJ for all locations?  If doing this, how would the IRS know that another company created in NY is identifying with this EIN?

3- Let's say I DO require separate EINs for each state- would each state/EIN/company have completely separate accounting ?

4- I would like to elect S-Corp status- so for my current EIN (NJ)- I would file form 2553 to make that election correct ?  And by doing so I would become a W2 employee for the company, correct?

5-Again,  Let's say I DO require separate EINs for each state, and I have elected S-Corp for each EIN (NJ/NY)- how would I choose which EIN/State/Company to be W2'd from?  I live in NJ- so I'm assuming that would be best option for W2? 

Any other advice or considerations I should know will be much appreciated!  Thanking you in advance!

[JulieS]

Yes, you do need a second EIN (Employer Identification Number) for your New York company. This because the New York company has a different legal name and is actually a different type of entity.

A Limited Liability Company is distinct from a Professional Limited Liability Company. 

You need to do separate accounting and separate tax returns for both businesses. S-Corporations file Form 1120-S to report income and expenses.

Filing Form 2553 is the correct way to request permission to be an S-Corporation. 

You need to pay a fair amount of wages to yourself, an employee, or both for a profitable S-Corporation. Depending on your situation, you may need to file W-2 Forms for both companies for yourself. If you are providing services in New York, you need to receive wages in New York. 

You should be aware that your New York income will taxed in New York even though you live in New Jersey. 

Click here for more information on filing in NY and NJ.

[Mike9241]

1- Do I need a 2nd EIN for the NY location?  no

You will not be required to obtain a new EIN if add other locations or you operate multiple businesses.

2- Can I use my current EIN that was created in NJ for all locations?  If doing this, how would the IRS know that another company created in NY is identifying with this EIN?

the IRS doesn't care. all your income gets reported on schedule C. however,  the state may require you to obtain a state ID number because toy will have to file state income tax returns for both states

3- Let's say I DO require separate EINs for each state- would each state/EIN/company have completely separate accounting ? you do need separate records because of the state income tax filing requirements 

4- I would like to elect S-Corp status- so for my current EIN (NJ)- I would file form 2553 to make that election correct ?  And by doing so I would become a W2 employee for the company, correct?

correct and converting to an S-corp would require a new EIN for the corp

5-Again,  Let's say I DO require separate EINs for each state, and I have elected S-Corp for each EIN (NJ/NY)- how would I choose which EIN/State/Company to be W2'd from?  I live in NJ- so I'm assuming that would be best option for W2? 

if you form separate S-Corp s  each will need its own EIN. you would need to take a salary from both.

one S-Corp operating in both states creates different issues.  (for state taxation of business most states use a formula to allocate income. the factors can be sales in each state, physical property in each state - rented property is included usually at 8 times the annual rental and wages paid in each state. some use 1 some all 3 some give different weight to the factors ) I would suggest you consult a tax pro for this. 

[AmeliesUncle]

Your situation absolutely requires you to be going to a good tax professional.  For your sake, DON'T do this yourself.

[Rick19744]

I am also going to advise you meet with a tax professional that understand both NY and NJ state tax implications.

Without spending too much time researching this, off the top of my head, I am leaning towards setting up two separate LLC's.

• NJ does not allow for a PLLC
• The NY PLLC statute requires specific items be addressed in your articles of organization that would not be applicable for your NJ practice.
• I think setting up two separate LLC's would minimize your NY tax liability, but can't say for sure since we don't have anything to go on.  
• NY is very aggressive in claiming revenue on nonresidents that work in NY.  This has really come to the forefront as a result of the pandemic.  That is the reason for my preliminary thought on separate entities.
• Spend the $$ upfront to make sure the decision(s) you make are the best for your vision of the business.  Not doing so, could cost significant headaches and $$ down the road.

[Carl]

An LLC and PLLC are two distinctly separate business types. So you will have two businesses. If you elect S-Corp status then you will file a 2553 for each business and you will have two separate S-Corps; one in NJ one in NY. I would highly advise that you consult with a local tax professional in your area that is familiar with tax laws in both states, as there are quite a few other options available to you, that "might" be better on the tax front. But the options and details of each would take to long to cover in a forum such as this. A tax professional would be well worth the cost to get yourself educated on this stuff.

I also note that you have conflicting replies in this thread. All the more reason to seek local professional help on this.