When I am filling out a W9 as a 1099 contractor, do I use my SSN or the EIN that was created when I formed my LLC? I have a single member LLC.

[Critter-3]

Why else would a sole prop or single member LLC get an EIN if they could not use it  to shield their SS# ? The W-9 instructions clearly says you can use either on the form so you CAN put the EIN to safeguard your SS# (see my other post).  When you get the EIN you had to link it to your SS#  and on the Sch C that you file BOTH the SS# & EIN are listed on the form  so any income reported in either number will track back to the same Sch C.  

[RyanCScott]

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@Critter-3 wrote:

Why else would a sole prop or single member LLC get an EIN if they could not use it  to shield their SS# ? The W-9 instructions clearly says you can use either on the form so you CAN put the EIN to safeguard your SS# (see my other post).  When you get the EIN you had to link it to your SS#  and on the Sch C that you file BOTH the SS# & EIN are listed on the form  so any income reported in either number will track back to the same Sch C.  

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Yeah the IRS confirmed this. Your SMLLC EIN is linked to you. It's the only EIN that I have, and it didn't look like I could sign up for another sole proprietor EIN as the same business. Having different EIN numbers on my taxes and W9 forms also seems like it could cause issues. Everything online says that the LLC EIN is only for opening a bank account or payroll, but that number is tied to you just like a sole proprietor EIN. If there were any issues with it on a W9 form, you and the IRS have records confirming that it's yours.

[taqu]

Did the IRS say when they might update the instructions for the W9? 

[taqu]

Per the IRS website page for Single Member Limited Liability Companies (link here: https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-compan...) "For federal income tax purposes, a single-member LLC classified as a disregarded entity generally must use the owner's social security number (SSN) or employer identification number (EIN) for all information returns and reporting related to income tax." 

[RyanCScott]

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@taqu wrote:

use the owner's social security number (SSN) or employer identification number (EIN) for all information returns and reporting related to income tax." 

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Yeah that's the confusing part. Your LLC EIN is registered in your name with your social security number. The IRS said that as long as you're reporting your LLC on your Schedule C, everything will be reported correctly. I'm not giving out my SSN to clients and I don't have a separate sole proprietor EIN, so the IRS confirmed that using the LLC EIN is the right choice. Your LLC EIN will also be consistent on all tax documents.

From what I've seen, I can't go back and get a sole proprietor EIN for the same business now that I have the LLC EIN. Also, it seems to me that if you have an old sole proprietor EIN that you had from before your LLC, you basically have EINs for two businesses. If you continue to use the sole proprietor EIN, you're still doing business as yourself only. You're not using your LLC. If there were ever any legal issues, your client can show that they were never doing business with an LLC, they were working with you directly. You don't have even the small amount of liability protection that an SMLLC allows.

Getting professional advice is the best option for everyone though. Don't just go by the internet.

[RyanCScott]

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@taqu wrote:

Did the IRS say when they might update the instructions for the W9? 

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I didn't ask. I don't expect them to be updated anytime soon. They spent a long time double checking to confirm their advice on the form because the instructions are so confusing.

I think talking to someone is always the best option. All of the advice that I've gotten said to use your LLC's information if you're doing business under it. I'm going to call again to get more clarification on this and some other questions.

[taqu]

Did the IRS say which department or group they reached out to clarify? It would be great to have a contact reference. 

[taqu]

Did the IRS say if the SMLLC should be in line 1 or to fill in the individuals name on line 1 and the SMLLC name in line 2? If the IRS said the latter, then how would they suggest dealing with Part I which instructs "The TIN provided must match the name given on line 1 to avoid backup withholding."?

Professionals have generally said to follow the form instructions. But some have said to do what you heard back from the IRS.

The problem is when sending the W9 to clients using the SMLLC EIN number. Your clients professionals would likely push back and request the W9 be sent with your SS number. What would the IRS suggest doing then? 

[RyanCScott]

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@taqu wrote:

Did the IRS say which department or group they reached out to clarify? It would be great to have a contact reference. 

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I called the business line for the IRS, but I don't know who they checked with while I was on the phone. I have the name and ID number of the guy that I spoke with. I recommend calling yourself. You can leave your number and they'll call back when they get to you in the queue.

[RyanCScott]

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@taqu wrote:

Did the IRS say if the SMLLC should be in line 1 or to fill in the individuals name on line 1 and the SMLLC name in line 2? If the IRS said the latter, then how would they suggest dealing with Part I which instructs "The TIN provided must match the name given on line 1 to avoid backup withholding."?

Professionals have generally said to follow the form instructions. But some have said to do what you heard back from the IRS.

The problem is when sending the W9 to clients using the SMLLC EIN number. Your clients professionals would likely push back and request the W9 be sent with your SS number. What would the IRS suggest doing then? 

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Both the IRS and the accountant said to use your business information. I'm going to confirm with the IRS if the name on line 1 should be the LLC, but the accountant said that you don't need to use your name. It would make sense to use the LLC since the client and the IRS just need a name and matching EIN. The line 1 instructions also say to use the name that's on your taxes, and that's both your own name and your LLC's name. If you use your own name on a W-9, you'd have to use your SSN or a sole proprietor EIN, but you wouldn't be doing business under your LLC in my opinion. I'm going to make sure of this.

[AbrahamT]

A sole proprietorship or disregarded entity, the IRS requires that you show your individual name. You may also enter your business or DBA name on the "Business name/disregarded entity" line. You may use either your SSN or your EIN, but the IRS encourages the use of your SSN. You can see more about that HERE , See page 3 Line 1, Part B

and Pg. 4, Line 6,Part 1 

[RyanCScott]

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@AbrahamT wrote:

A sole proprietorship or disregarded entity, the IRS requires that you show your individual name. You may also enter your business or DBA name on the "Business name/disregarded entity" line. You may use either your SSN or your EIN, but the IRS encourages the use of your SSN. You can see more about that HERE , See page 3 Line 1, Part B

and Pg. 4, Line 6,Part 1 

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I understand the issue with the instructions, that's why I called the IRS and got advice from an accountant. I don't have a sole proprietor EIN, only an LLC EIN, and I won't use my SSN on a W-9. The instructions for getting a sole proprietor EIN say that you choose the option if you aren't registered as an LLC. I have an LLC. The name on line 1 and number under Part I have to match, so it makes sense to use my LLC name and EIN. I'm going to get another confirmation of this, but it's the advice that I was given.

I want my clients to do business with the LLC. In my opinion, giving your name and SSN shows your client that they've been doing business with you personally. If there are any legal issues, you don't have even the limited SMLLC protection that it provides. They can go after your personal assets.

[AliciaP1]

If you will be including your EIN on your Schedule C, best practice would be to complete the W9 using your name on line 1, the name of the LLC on line 2 and using the EIN as the identification number.  For line 3, you should be sure to mark the box "Individual/sole proprietor or single-member LLC".  While there are no guarantees the payer will send the checks in the name of the business, it is most likely that is how you would receive them after filling out the W9 this way.  Either way, you will still report the income on your Schedule C.

@RyanCScott

[RyanCScott]

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@AliciaP1 wrote:

If you will be including your EIN on your Schedule C, best practice would be to complete the W9 using your name on line 1, the name of the LLC on line 2 and using the EIN as the identification number.  For line 3, you should be sure to mark the box "Individual/sole proprietor or single-member LLC".  While there are no guarantees the payer will send the checks in the name of the business, it is most likely that is how you would receive them after filling out the W9 this way.  Either way, you will still report the income on your Schedule C.

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The advice that I was given by the IRS and an accountant was to use my business information - the LLC name on line 1 and the LLC EIN under Part I. The line 1 name and the ID number have to match. Using an LLC EIN with your own name on line 1 could cause a mismatch. Line 2 can just have a DBA/fictitious name, so I think that anything that you put there is basically ignored. No one should just follow the advice that I've gotten though. Talking to someone and getting your own professional advice is always the best option.

[RyanCScott]

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@AliciaP1 wrote:

While there are no guarantees the payer will send the checks in the name of the business

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I agree that there's no guarantee if you put your name on line 1. To the payer, they're doing business with you, not with an LLC. You can have separate businesses - both a SMLLC and working under your own name. I think that people who form a SMLLC but continue to use an old sole proprietor EIN might as well not have an LLC.