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nalaessig
New Member

When to use EIN or SSN for single member LLC?

I had a business I ran as a sole proprietor for about 4 years that hadn't made too much and was not a problem to add to tax returns as it was only 1099-MISC income. It has since changed and is the main and only source of income for me. I registered the business as an single member LLC a year ago and requested an EIN a few months ago. I just submitted 2016 taxes using only my SSN, filing under a 1040 on the Schedule C, and did not include the EIN on there. The main reason I got the EIN was so that when I receive various 1099s the individuals and companies do not have my SSN. I must now submit quarterly tax payments which, since I filed under my SSN for 2016, shows that I must file quarterly with the SSN and cannot use the EIN. Should I forget about the EIN entirely, as the only point was to use it when individuals request a W9? Or can I still use it for that as it is connected to my SSN? I'm just afraid that if I pay my quarterly and annual tax returns with the SSN and use the EIN for individuals giving me a 1099, that could create a problem.

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Accepted Solutions
DS30
New Member

When to use EIN or SSN for single member LLC?

You will use your SSN since this is a disregarded entity. This applies to your quarterly estimated tax payments as well.

However, you can use either your SSN or EIN when receiving 1099-MISC income. Just make sure to report all these 1099-MISCs under your Schedule C since they all relate to your LLC business income.

Also you can use your EIN for your LLC when necessary like if purchasing property for your LLC or filing your Sales tax report with your state's Department of Revenue.

For more information see Single Member Limited Liability Companies

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25 Replies
DS30
New Member

When to use EIN or SSN for single member LLC?

You will use your SSN since this is a disregarded entity. This applies to your quarterly estimated tax payments as well.

However, you can use either your SSN or EIN when receiving 1099-MISC income. Just make sure to report all these 1099-MISCs under your Schedule C since they all relate to your LLC business income.

Also you can use your EIN for your LLC when necessary like if purchasing property for your LLC or filing your Sales tax report with your state's Department of Revenue.

For more information see Single Member Limited Liability Companies

When to use EIN or SSN for single member LLC?

This is great information.

 

I am concerned because I have a rental properties and I need to start issuing 1099-MISC to contractors with whom I spend more than $600 per year.  My understanding is that this is necessary in order to take advantage of the new pass-through 20% deduction.

 

I set up a LLC for the last property I purchased.  So, I can use the EIN for the LLC to issue the 1099-MISC, right?  

 

Can I use the same EIN even if the properties were not purchased under the LLC but are all under my name?

 

I am trying to avoid giving out my SSN.

 

Thanks.

Carl
Level 15

When to use EIN or SSN for single member LLC?

I just submitted 2016 taxes using only my SSN, filing under a 1040 on the Schedule C, and did not include the EIN on there.

Doesn't matter. Remember, *ONLY* the IRS issues EINs. When you requested the EIN you had to provide an SSN for the IRS to tie that EIN to. So it *does* *not* *matter* which you use when dealing with the IRS. THe IRS *knows* what SSN the EIN belogs to, and you and the IRS are the only ones who need to know what SSN your EIN is tied to.

The main reason I got the EIN was so that when I receive various 1099s the individuals and companies do not have my SSN.

Actually, that's the *only* reason to have an EIN, and it's a very important reason to have it. If your EIN gets abused the only thing affected is the business. But if your SSN gets abused, it can destroy your entire life.

 

I must now submit quarterly tax payments which, since I filed under my SSN for 2016, shows that I must file quarterly with the SSN and cannot use the EIN.

Not true by any stretch of the imagination. LIke I said, the IRS knows "exactly" what SSN that EIN is tied to. No, it's not a "MUST" that you file with your SSN either. You can use either. I"ve had some quarters where I'ved filed with the SSN, and other quarters with the EIN. It *does* *not* *matter* and is not a problem or issue for the IRS.

Should I forget about the EIN entirely, as the only point was to use it when individuals request a W9?

 If the W-9 is being requested by a business client, then why on earth would you give them your SSN when you have an EIN? There is no reason on this green earth why anyone needs my SSN when I have an EIN. They get my EIN only, or they can take their business elsewhere. If that's a problem for them, then that's exactly what is....."THEIR" problem. Not mine.

 I'm just afraid that if I pay my quarterly and annual tax returns with the SSN and use the EIN for individuals giving me a 1099, that could create a problem.

Your fears are based on no facts what-so-ever and are completely misfounded and untrue. But under no circumstances and with no exceptions should you "EVER" give your SSN to anyone for any reason when you have an EIN. There are no valid exceptions either. When running a business, there are only two business clients who have a legal requirement for your SSN instead of your EIN. That would be the IRS, (since they need it to issue the EIN) and any other taxing authority that taxes your personal income (such as your state and possibly your county if your business is required to be licensed below the state level.)

 

When to use EIN or SSN for single member LLC?

Ok, this is common sense, however the IRS instructions for Form W-9 are very confusing:

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.

 

Thus, it seems IRS only wants the Disregarded LLC's EIN to be used for excise tax and employer-related tax returns like Form W-2, but not for Form 1099!

 

Yet, when you look at the Form SS-4 instructions, IRS provides a more detailed explanation to this effect, however it also is kind of waffling on the subject.  See the underlined last sentence below:

Taxpayer Identification Number

 

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. For example, if a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, Request for Taxpayer Identification Number (TIN) and Certification, the W-9 should provide the owner’s SSN or EIN, not the LLC’s EIN.

 

For certain Employment Tax and Excise Tax requirements discussed below, the EIN of the LLC must be used. An LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below. Most new single-member LLCs classified as disregarded entities will need to obtain an EIN. An LLC applies for an EIN by filing Form SS-4, Application for Employer Identification Number. See Form SS-4 for information on applying for an EIN.

 

A single-member LLC that is a disregarded entity that does not have employees and does not have an excise tax liability does not need an EIN. It should use the name and TIN of the single member owner for federal tax purposes. However, if a single-member LLC, whose taxable income and loss will be reported by the single member owner needs an EIN to open a bank account or if state tax law requires the single-member LLC to have a federal EIN, then the LLC can apply for and obtain an EIN.

 

My point is, if you can use the LLC's EIN for state tax law and a bank's Form 1099-INT, why can't it also be used by other businesses on Form 1099-MISC?  It seems really wrong that I'd need to use my older sole proprietor EIN  for others to report their payments to my disregarded LLC even when it already has its own EIN!

 

I also really wonder, as was just described in this thread, since IRS in the back-end has the LLC's EIN linked to a responsible party's EIN or SSN, what really would happen if the disregarded LLC's EIN is used on a Form W-9 and Form 1099-MISC despite IRS's instructions?

When to use EIN or SSN for single member LLC?

The reason that a Single Member LLC (SMLLC) is required to use the SSN of the owner is because of backup withholding.  If the legal name and Taxpayer Identification Number (TIN) that the IRS expects to be associated with the reporting do not match their database, a red flag will go up.  Think of the W-9 form as a map.  The W-9 ties into the 1099-MISC because that is the form that reports amounts paid to an independent contractor.  Interest payments are not the same as services performed, and they don't fall under the same category.

 

SMLLCs are considered disregarded entities separate from their owners, as you know.  This is because the IRS expects the taxpayer to carry the income onto his or her personal tax return.  For this purpose, it's irrelevant whether the LLC uses its own EIN for banking.  Imagine you are going to the airport to catch a flight.  It doesn't matter if you are representing your business or if it's a personal vacation- you need to show your driver's license and not your Articles of Organization to get on the plane.

 

Form W-9 asks for the Name as shown on your tax return on line one, and the Business Name / Disregarded Entity name on line two.  Line two makes it clear to the IRS that there is another EIN out there being used in banks, for example.  If the disregarded LLC's EIN is used on Form W-9 line one and on Form 1099-MISC, then nothing will happen to you when you file your tax return; however, the IRS could potentially inform the withholding agent that they are required to collect a B Notice from you to correct the information.  The next step is backup withholding.

 

@cparke3

When to use EIN or SSN for single member LLC?

Hi Renee - this is a really helpful explanation, thank you!

 

One follow-up: The main distinction you make between banks who use Form 1099-INT and others that use Form 1099-MISC really boils down to passive vs. non-passive income and making sure the legal name reported matches the EIN.

 

However, Form 1099-MISC can also be required to report passive income, in my case Schedule E Rental Income and Royalties.  Furthermore, under the reasoning that you've used, it seems to me that it would perfectly fine for me to use the disregarded LLC's EIN on Form W-9, so long as the legal name given on Line 1 matches the EIN, just as it usually does when banks also use Form W-9 to report interest income?

DianeW777
Employee Tax Expert

When to use EIN or SSN for single member LLC?

The information provided by @ReneeM7122 brings us to the same result where the IRS is matching the income to the return.  With that being said, if you choose to disregard that and enter the LLC name using the EIN, be prepared to provide the necessary information should the IRS database initiate an inquiry. Their goal will be to see if and where the income has been reported.  

 

By using the nominee action to transfer the income from the EIN to the SSN it would eliminate the IRS problem, if you choose to use the LLC on the W-9.

 

Nominee returns

Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received).  You must also furnish a Form 1099 to each of the other owners. 

File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)

  • On each new Form 1099, list yourself as the payer and the other owner, as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here: 

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When to use EIN or SSN for single member LLC?

For INCOME tax purposes, you use the SSN or EIN of the individual person.  That include filling out a W-9 and receiving 1099s.

 

For other purposes (excise taxes, payroll taxes, employer retirement plans, etc.), you use the EIN of the LLC.

When to use EIN or SSN for single member LLC?

This is good advice, thank you!

 

Though frankly the same procedure probably is relevant even if the only 1099's the disregarded LLC receives are 1099-INT from bank, all the same the disregarded LLC is merely a nominee recipient of the interest income.

 

Kind of silly though for the disregarded LLC, being a pass-thru entity for income tax purposes, has to act as a nominee for underlying person who is already responsible for reporting the disregarded LLC's income on their return.  Never heard that procedure documented before!

 

Taken to the extreme, all other income of the disregarded LLC, whether reported to the LLC by a Form 1099 or not, is nominee income and should be reported to the single member owner on a Form 1099-MISC.  At which point, you almost have the LLC no longer treated as a disregarded entity and Form 1099-MISC seems awfully similar to Form K-1, except there is no business return to support the amount on the information return!

hjs738
Returning Member

When to use EIN or SSN for single member LLC?

When you say "For INCOME tax purposes, you use the SSN or EIN of the individual person.  That include filling out a W-9 and receiving 1099s."  Is that a different EIN (as sole proprietor)?  If yes, is that EIN simply in my name since my single member llc already has a separate EIN 

DawnC
Employee Tax Expert

When to use EIN or SSN for single member LLC?

If you have an EIN, use it on your business returns.  But if you get a W-9 from a person or company, use whatever is on that form (their SSN or EIN) when you issue 1099s to that business or person.   If you are giving someone else a W-9, use your EIN if they are paying you for business transactions OR use your SSN if they are paying you for personal things unrelated to your business.  @hjs738

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When to use EIN or SSN for single member LLC?


@hjs738 wrote:

 is that EIN simply in my name since my single member llc already has a separate EIN 


Yes.  When filling out a W-9 (to receive 1099s), you use the EIN  (or SSN) that is in YOUR name, not the name of the LLC.

When to use EIN or SSN for single member LLC?

So, @DS30, @alessiog, @Carl, @cparke3, @ReneeM7122, @DianeW777, @AmeliesUncle, @hjs738, @DawnC, with a single member LLC, I use my owner's EIN (the EIN in my own name, not the LLC's EIN) on the W-9 and provide it for other tax purposes (like to Stripe / PayPal for the 1099-K, etc.).

 

To open a business bank account for my LLC, I requested an EIN for my LLC, which was needed for this, and provided that to my bank. Now, I've received a 1099-INT in the LLC's name and LLC's EIN from my bank--per the IRS that "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,do I actually need to request that the bank reissue the 1099-INT in my name and SSN or EIN?

 

Relatedly, even though I am putting my EIN on W-9s, etc., I still put the LLC's EIN on line D of Schedule C?

 

...Putting the LLC's EIN on Schedule C looks like it would be following what the IRS says for line D instructions: "If you are the sole owner of an LLC that is not treated as a separate entity for federal income tax purposes, enter on line D the EIN that was issued to the LLC (in the LLC's legal name) for a qualified retirement plan, to file employment, excise, alcohol, tobacco, or firearms returns, or as a payer of gambling winnings. If you do not have such an EIN, leave line D blank"

 

(...Or, I think it would be, at least? I had to request the EIN for the LLC to open a bank account, not for one of the reasons they mention above. Oye! Definitely confused by the IRS and how unnecessarily convoluted this seems--any help is much appreciated.)

When to use EIN or SSN for single member LLC?

per the IRS says having two EIN's is okay.

You will not be required to obtain a new EIN if the following statements is true.


A new LLC with one owner (single member LLC) is formed under state law, does not choose to be taxed as a corporation or S corporation, and has no employees or excise tax liability. NOTE: You may request an EIN for banking or state tax purposes, but an EIN is not required for federal tax purposes.

 

here's a suggestion though. use the LLC's EIN for all business purposes. 

 by the way should you start another business, whether or not as an LLC, and not electing partnership or S-Corp status, the IRS says you should not obtain another EIN. 

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