I am preparing to file Form 1065 for my LLC. a few members of this LLC are sole proprietors that operate their business under their own name and EIN.
In Turbotax, I input the members' info as individuals, and Turbotax does not allow me to file said TINs in wrong formats. it has to be in xxx-xx-xxxx SSN format. if I choose the member is not a person, and then input EIN, Turbotax asks me to input the entity type for the EIN, and there is ndividual/Sole Proprietor option in the entity dropdown list.
How do it get this problem solved? or I have to print it out and mail it for filing
@brilliantusa I am confused as to your entity ownership. What I get is
(a) You have a partnership / multi-member LLC
(b) Some of the members themselves also have sole proprietor business.
(c) Are you saying g that these sole proprietorships ( dis-regarded entities ) entities are members OR the sole-proprietor owners ( persons ) are members ?
(d) Partnerships themselves ( at entity level) obviously can be natural person or fictitious person.
(e) my sense of your entity is a partnership of persons with SSN but obviously there should be no issue having an EIN if the member does business as an entity -- if TubroTax gives you trouble you can always enter the EIN in the SSN format. For tax purposes though a single member LLC is disregarded entity and files schedule-C with owner SSN
Does this make sense ?
maybe not quite understanding. are you say that their business are the members of the LLC not them individually.
if so based on what you provided their businesses (sole proprietorships) are disregarded and the k-1s go to the owners which means you need the owners SSN
if there business were S-corps or partnerships then the k-1's would be issued in the name of the S-corp or partnership and the EIN would be used.
the issue is at their end. filing a schedule C doesn't allow for reporting k-1s from pass through entities (like your partnership). rather they would report as if the k-1 was received directly by them.
I agree with Mike9241. Because a sole proprietorship is a disregarded entity, the individuals, not the individuals' sole proprietorships, are the partners in the partnership and must provide you with their SSNs, not their EINs.
your understanding is right.
it is a multiple-member LLC.
some members have sole proprietor businesses
the sole proprietor owners are members
thank you for your suggestion, I will put the EIN in SSN format.
sorry, I think I typed it wrong in the previous post. the members' sole proprietorship are the members of LLC, not the person who owns the sole proprietorship. That's why they gave me their EIN instead of their SSN. I believe not exposing their SSN is one of the reasons.
the IRS instructions are as follows
In the case of a disregarded entity (DE), the partnership will enter the TIN of the beneficial owner of the DE in item E and the beneficial owner's address in item F.
the sole proprietorships are DEs
the beneficial owner of the DE is the sole proprietor
so turbotax is following IRS instructions and requiring an SSN. there is no way around this if you want to efile.
I don't know what the IRS position would be if you paper filed using the EINs and name of the sole proprietorships
@brilliantusa wrote:
the members' sole proprietorship are the members of LLC, not the person who owns the sole proprietorship.
The sole proprietorship is disregarded. (It's a "disregarded entity.") For tax purposes the sole proprietorship does not exist separately from the person. The person and the sole proprietorship are one and the same. The IRS does not allow a disregarded entity to be listed as a member of an LLC. The person is the member of the LLC.