Sole proprietor and Single Member LLC

[Anonymous]

I have recently formed an LLC (single member) for my consulting business and had an EIN issued. I am billing new clients through the LLC, but I still have existing clients that I originally worked with as an independent contractor (sole proprietor) and that arrangement won't change. Those 1099s will report directly to my SSN.

From a general financial perspective, I will keep the LLC and sole proprietor books separate (since they are separate legal entities), but I'm wondering how this mix affects things tax-wise.

Even though they are legally separate, as far as the IRS cares, my single-member LLC and me as a sole proprietor are the same thing, right? So, I should just be able to file a single Schedule C, noting both my SSN and the LLC's EIN, and consolidate the P&L from the LLC and sole proprietor side?

Thanks for any answers!

[VolvoGirl]

If your Single Member LLC is NOT set up as a S-Corp then it is a disregarded entity and you file it on schedule C in your personal tax return.  So you can combine it on the same schedule C.  Don't know if you need to keep the books separate.  You could have just kept going in the same set of books.  

If your SMLLC is a S-Corp then you need to file a separate Business Tax return 112-S for it.  

[Mike9241]

taxwise since you are conducting the same business activities both the LLCs activities and the sole proprietor activities are reported on the same schedule C.  

you may want to see this about converting the sole proprietorship to your LLC.  

https://www.legalzoom.com/articles/can-you-change-a-sole-proprietorship-to-an-llc#:~:text=You%20can.... 

[AmeliesUncle]

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@Anonymous wrote:

Those 1099s will report directly to my SSN.

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Assuming your Single Member LLC has NOT made an election to be taxed as a corporation, ALL of the 1099s that you receive should be issued in YOUR name and YOUR identification number (SSN or EIN in YOUR name).  

When you fill out a W-9 (so clients can send you a 1099), the Instructions are clear that you do NOT but the name of the LLC on Line 1 and you do NOT use the EIN of LLC.

[Anonymous]

AmeliesUncle,

Thanks for the clarification - you are absolutely correct, and that is a detail I neglected in my original question.

Had I remembered that, I probably could have answered my own question. I have not made any 8832 election, so all 1099s should report to me as an individual anyway. So, the LLC really doesn't factor into Schedule C at all, other than I may list it on Line C (Business Name).

Now that I recall this, the only time the LLC's EIN would be used is with LLC employees (W2 and other payroll reporting), which isn't an issue for me.

Thanks again.

[Carl]

One thing to remember is that when you registered the single member LLC with the IRS for an EIN, that EIN is tied directly to your SSN. So weather a 1099-MISC or 1099-NEC you receive has your SSN or EIN on it, really doesn't matter. Only you and the IRS know what SSN the EIN is tied too, and nobody else needs to know that. (Except maybe your state taxing authority if your state taxes personal income.)

Overall, I would recommend that you  issue a new W-9 to all those still using your SSN. If after doing that you still get a 1099 with your SSN on it, that's really no problem.

In my SSLLC I have never given my SSN and never will with no exceptions. They get my EIN or can go elsewhere.  My thinking on this is that if my EIN is abused, that only affects the business. But if the SSN is abused it can destroy one's entire financial life.

[AmeliesUncle]

Carl, you should be giving other an EIN in YOUR name, not the EIN of the LLC.  The instructions for the W-9 are very clear about that, and the IRS even sends out notices about mismatching if the 1099s are not correct.