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    #1

    Ein

    Sole proprietor of small cleaning business that has been in existence for several years. Her retired husband is now helping her with the cleaning business and she is paying him $300 per month. I set her up with EFTPS to make payroll deposit. But now am wondering if she is required to have an EIN in order to file the payroll taxes. Since she was a sole prop she has never gotten one.

    Linda F.
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    #2
    Yes but see IRS website for reference or TheTax Book
    Always cite your source for support to defend your opinion

    Comment

      #3
      SP with W-2's will need an EIN. There would be no need for EFTPS as annual taxes for 3,600 would be less than 1,000 and can be paid with 944.

      A couple things to consider as to if paying husband paycheck is best way to go:

      The wages paid to him will decrease Sch C profits and accordingly the 199A deduction.
      Doubtful the 3,600 would replace one of his highest 35 years for SS benefits, so unless her benefits are less than 1/2 his, better to have the extra 3,600 going to her SS account.
      Possible need to have worker comp insurance depending on state laws.
      Extra paperwork for 944, W-2/3 and state reporting.

      Comment

        #4
        We figured their returns several ways. By paying him a salary, she can also have a medical reimbursement plan for him which will further reduce her self-employment tax. Also it will lower gross income so that less and maybe none of his social security will be taxable.
        I will get the EIN

        kathyc2 - I thought IRS had to tell you that you can use the 944. Can I just have her put the money back for the payroll taxes until January and do a 944 at that time and pay the payroll taxes.

        Linda F

        Comment

          #5
          Originally posted by oceanlovin'ea View Post

          kathyc2 - I thought IRS had to tell you that you can use the 944. Can I just have her put the money back for the payroll taxes until January and do a 944 at that time and pay the payroll taxes.

          Linda F
          Check box 14 on SS4 to have default form be 944.

          Comment

            #6
            If a sole member LLC, filing on a Schedule C, transfers 100% ownership to her son, is a new EIN required ? Also, the son wants to file for a reclassification as an S-Corp. My research shows that he needs a new EIN.. Any feedback would be appreciated.

            Comment

              #7
              Originally posted by taxman1115 View Post
              If a sole member LLC, filing on a Schedule C, transfers 100% ownership to her son, is a new EIN required ? Also, the son wants to file for a reclassification as an S-Corp. My research shows that he needs a new EIN.. Any feedback would be appreciated.
              If your research shows that it is required that should be the answer. Will you share the research you mentioned?
              Always cite your source for support to defend your opinion

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              This message board allows participants to freely exchange ideas and opinions on areas concerning taxes. The comments posted are the opinions of participants and not that of Tax Materials, Inc. We make no claim as to the accuracy of the information and will not be held liable for any damages caused by using such information. Tax Materials, Inc. reserves the right to delete or modify inappropriate postings.

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