united-states, taxes, llcI am a one man LLC and have no plans for employees.
The W-9 form has this bit in the instructions
If you are a single-member LLC that is disregarded as an entity separate from
its owner (see Limited Liability Company (LLC) on this page), enter the
owner’s SSN (or EIN, if the owner has one)...
To avoid having to email my SSN with my W9 all over the place, I’d really like to use an EIN. My issue is that the EIN application is confusing. Step 1 asks for the type of EIN. I have an LLC taxed as a disregarded entity. Choosing the LLC options seems wrong given the W-9’s instructions. But, choosing the sole proprietor seems wrong given the EIN applications instructions.
A sole proprietor is one individual who owns a company that is not
incorporated or registered with the state as a limited liability company
(LLC). Sole proprietors may or may not have employees.
My inkling is that i do in fact need a sole proprietor EIN for my situation. Is that correct?
You can apply for an EIN, on behalf of the new business/ LLC. This number is just like your SSN. However the EIN belongs to the business.
For sole proprietors, you just typically use your SSN.
However, since your registering the business as a “single member LLC”, you’ll likely need to provide the IRS your SSN in order to request an FIN.
Background:
When you establish an LLC (Limited Liability Company) you are essentially creating a new business/entity. You (and others) can own this entity. However, the entity also has a life of its own. It can someday apply for a loan. It can someday take on it’s own credit and liabilities, etc…
The major benefit to having an LLC is that the company’s owners are shielded again any personal liability and the owners also benefit from not being double taxed (as the other types of businesses – corporations – are).
The SBA is a great reference if you have questions about what makes an LLC and LLC. In fact, I would recommend you try to contact one of their staff. They’ll happily sit down with you and help your business for free! They will answer just about any questions or concerns you may have with starting a business. Check them out at https://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/choose-your-business-stru
From my personal experience an LLC is the way to go. But it really depends on your particular business and personal situation.
Also some side notes to keep in mind:
One responsibility of the owner of an LLC is to maintain separate financial records between your personal matters and your business matters.
You will likely provide your EIN to sub-contractors, banks, or others when dealing with business matters which only involve the business. However, you would provide your SSN when dealing with personal matters.
There will be times when you will provide both for business matters. For example, applying for an FIN, or when applying for a small business loan. Most banks and the government want full disclosure to the ownership of the business. Most banks will not just give your new business a boat load of money without first having you personally backing the loan.
Also, keep in mind taxes. If you form an LLC (Limited Liability Company) as the only owner, your business taxes a will likely be submitted via a Schedule C. In the government’s eyes, since the business is owned by a single member, your taxes are payed as through you, and are called “pass-through taxes”.
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