@Rick19744 wrote:
- 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.
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
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."
Let me summarize what you are saying and provide some input:
@Rick19744 wrote:
- 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.
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
The parens indicate you can use an EIN if the owner has one.
I believe you are fine.
@Rick19744 wrote:
The parens indicate you can use an EIN if the owners has one.
I believe you are fine.
Yes, if the OWNER has one (EIN in the name of the individual person), that can be used.
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.
@RyanCScott wrote:I called, and the IRS said
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.
@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.
@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.
@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.
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.
@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.
@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
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'.
@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.
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.
@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.
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.
@RyanCScott wrote:Employees at any organization (especially with the government) have a responsibility to give you accurate information.
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.
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.
@AmeliesUncle wrote: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.
You're right, I don't call the IRS that often. I'm going to call back for clarification to see if I get the different answers that you're talking about. If I get the same answer and it matches the accountant, I plan to go with the professionals' advice.
You're also right that there would be a mismatch with using your own name on line 1 and an LLC EIN on the W9. That's why they've all recommended using your business information. Using my LLC name on line 1 and LLC EIN under Part I will match my tax return. I think that getting information that matches is all that the IRS is concerned with, and your client wants to know if they're doing business with you personally or an LLC. And yes, a sole proprietor EIN and an LLC EIN are different. I don't have (and it looks like I can't get) a sole proprietor EIN, I don't want to do business as just a sole proprietor, and I won't use my SSN, so I don't have much choice besides using my LLC info. I'm interested though, what happened after a mismatch notice was sent out? Were there any penalties, or did the person/LLC just correct the information?
So I'm a little confused here as to what to do. What did you finally do? Use your SMLLC's name and EIN or your name and the SMLLC's EIN on the W-9?
Also AFAIK you can only get an EIN for a LLC. I started as a Multi Member LLC with an S-Corp election with the EIN was issued. The S-Corp election was revoked and it is now a Single Member LLC. I'm guessing the EIN is still valid and tied to the LLC. So I'm trying to understand what do enter in the W-9.
This article seems to suggest entering my name with my LLC's EIN: https://www.upcounsel.com/filling-out-w9-for-llc
The IRS website seems to suggest that I will need a new EIN number after changing from Partnership to a Sole proprietorship: https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-a-new-ein
Technically my LLC changed from Multi Member to Single Member, but is still an LLC - however it is taxed as a sole proprietorship. Does this mean I cannot continue to use my EIN after changing from MMLLC to SMLLC?
This site seems to state that no new EIN is required when moving from MMLLC to SMLLC: https://www.llcuniversity.com/irs/ein-responsible-party-for-llc/
Open to advice and thoughts.
I'm using my LLC's name on line 1 and EIN number for the LLC, but you shouldn't follow online advice. I talked to an accountant and the IRS. You need to get professional advice about the change from multi-member to single member LLC. They can also advise you on fililng out the W9.
@Anonymous wrote:Use your SMLLC's name and EIN or your name and the SMLLC's EIN on the W-9?
The S-Corp election was revoked
Did you read what the Instructions for the W-9 ask you to do?
If you merely "revoked" the S-election, it is now taxed as a C-corporation. Or did you file (and qualify for) form 8832 to be taxed as a disregarded entity?
Revoked and filed 8832 to be taxed as sole proprietorship as I mentioned above. (Digressing slightly: This website does a brilliant job to explaining the steps to revoke and fix the tax elections. https://www.llcuniversity.com/irs/llc-revoke-s-corp-election/#your-llcs-revocation-of-s-corporation-letter-must-include)
the w-9 instructions are vague at best and at odds with everything else I’m reading and hearing. So I’m looking to see what others are doing and an open to suggestions and thoughts.
@RyanCScott are you a SMLLC with an EIN against your LLC or EIN against your Sole proprietorship? This whole EIN against LLC vs Sole proprietor is also very confusing. How does one even tell what the EIN was issued against?
Just to chime in and give a more recent answer . . . the owner of a single-member LLC was under the impression that since the letter they received from the IRS to assign their LLC's EIN said that it could be used to identify them, they should be able to use the LLC's EIN instead of their SSN on the W9. I could definitely see the confusion; therefore, I decided to call the IRS yesterday to see if anything had changed from the instructions, which says a single-member LLC must use their SSN (or their own EIN) - NOT their LLC's EIN on the W9.
Interestingly, I got a completely different answer from the one RyanCScott received when they called the IRS. The answer I received from the IRS rep aligned with AmeliesUncle's responses, the W9's instructions and the IRS web site. It didn't seem to matter that the single-member LLC's letter from the IRS that assigns the LLC's EIN says the number can be used to identify them.
The rep reiterated . . .
If it's a single-member LLC, the OWNER's name goes on Line 1 (NOT the LLC's name - the rep said that was incorrect, because the tax return that is filed for a single-member LLC is the 1040, and the name used on that form would be the owner's name - not the LLC . . . the name in this field must match what is on the tax return).
Single-member LLC's name goes on Line 2.
On Part I, the TIN must match up to the name on Line 1, which in the case of a single-member LLC is the owner's name. Therefore, unless the owner has their own EIN, the TIN they must give is their SSN - NOT the LLC's EIN if they are a single-member LLC/disregarded entity.
Single-member LLCs do not file a separate tax return from their owners, unlike LLCs taxed like a corporation. Single-member LLCs are pass-through entities only, and as such, all income and expenses are ultimately reported on the 1040 under the owner's name and SSN - not the LLC's name and LLC's EIN.
I was told to reject the W9 I received with the single-member LLC's EIN and told to tell the owner to resubmit the form with their SSN since they only had an EIN for their single-member LLC. While the IRS rep was not opposed to the person including their LLC's EIN on the W9 if they really insisted on it, she said the owner must also include their SSN per the instructions - and the SSN would be the number I would use when issuing the 1099.
The IRS rep encouraged me to tell the owner of the single-member LLC to call them if they were still confused - or if that person's accountant or tax attorney was advising them differently.
If anyone wants to call and see if they get another answer, the correct IRS number to call about this topic is (800) 829-4933. They are open from 7am-7pm (I'm guessing M-F).
@Xactor wrote:Interestingly, I got a completely different answer from the one RyanCScott received when they called the IRS.
@RyanCScott , having gone through most of this thread, I would just like to point out that
(a) a single member LLC is by default treated as a dis-regarded entity i.e. it has no existence separate from the owner -- therefore you use your own SSN and schedule-C for filing a return. However a single member LLC can choose to be treated as a C-Corp or S-corp -- but you have take the extra step to request that treatment.
(b) EIN for an LLC is a different matter -- it has to do with whether you have employees --- it is Employer Identification Number --- it is used for depositing the employee withholdings etc., even in the case of a dis-regarded entity. It is not directly connected to whether you are a disregarded entity or an entity.
(c) I totally support the thought process that when you start your business and/or at major changes , you should consider discussing / accounting methods / your options/ plans etc. with a tax professional or a tax attorney and structure your book-keeping and entity characteristics correct.
Hope this helps
pk
@pk wrote:@RyanCScott , having gone through most of this thread, I would just like to point out that
(a) a single member LLC is by default treated as a dis-regarded entity i.e. it has no existence separate from the owner -- therefore you use your own SSN and schedule-C for filing a return. However a single member LLC can choose to be treated as a C-Corp or S-corp -- but you have take the extra step to request that treatment.
(b) EIN for an LLC is a different matter -- it has to do with whether you have employees --- it is Employer Identification Number --- it is used for depositing the employee withholdings etc., even in the case of a dis-regarded entity. It is not directly connected to whether you are a disregarded entity or an entity.
(c) I totally support the thought process that when you start your business and/or at major changes , you should consider discussing / accounting methods / your options/ plans etc. with a tax professional or a tax attorney and structure your book-keeping and entity characteristics correct.
Hope this helps
pk
I understand everything you're saying. Comments in threads like this can give advice based on personal experience, but they should be geared towards directing people to contact tax professionals on their own. Any other discussion just leads to more confusion, which is all that I saw online before I contacted someone. I got a second (and third) opinion, and I'm going by that advice.
The main point that I received though is that the IRS has all of your information on file. Your SMLLC info isn't separate from your name and SSN, they're tied together and all listed on your taxes. If someone is comfortable with giving businesses their SSN though, they can do that. The fact that this thread keeps going makes me think that people see this as a larger issue than it is. I can post here if I have any issues in the future just as an update, but everything's good. The bottom line is I want to protect my SSN, and I'm comfortable with the advice I was given.