New EIN process.

[outwest]

Just did a online EIN application for the first time in a while and the process is much easier. It's now a series of guided questions that lead to the new EIN and an *IMMEDIATE * pdf copy of the assignment letter.

This was a new LLC, taxed as a partnership. The process asked which state, based on that response, it noted I'm in a community property state, then asked if this was a husband/wife LLC.

It now asks if employees are expected in the next 12 months, if not, then it skips the whole payroll expectations section.

Good grief, intelligent use of technology is even showing up at the IRS...

[John of PA]

Heads up on new single member LLC.

I agree, the new EIN number process online is great. Juat a reminder, a business that switched from a Sch C proprietorship to a singe-member LLC does not need a new EIN Number.

[Uncle Sam]

New EIN Process

Boy - isn't this new technology stuff real great?

Just fill out a form and get instant EI #.-don't have to know anything at all about tax responsibilities as a business owner or anything!!!!!!!!

I strongly feel that getting an EI # is too **** easy and the IRS should mandate that business owners applying for an EI # should be mandated to take a webinar or telephone conference (logged in by business name) given by IRS - at least weekly - before a business owner gets an EI # automatically.

Then - we'll all feel better as practitioners in dealing with clients and their delinquent tax problems ESPECIALLY payroll related.

[gailtaxed]

Having had clients come in at tax time with their EIN but no copy of the letter and no clue as to what entity they chose, I am inclined to agree that this might almost be too easy! I love the ones that just keep insisting they are an LLC, but don't know if they are incorporated are not because they "did everything online."

[erchess]

I agree, the new EIN number process online is great. Juat a reminder, a business that switched from a Sch C proprietorship to a singe-member LLC does not need a new EIN Number.

First, how common is it for an SP to have an EIN? I have only dealt with one SP that had an EIN and indeed it was that need which brought them to me. They had contractors working for them.

Second, is there any situation in which change of entity requires a new EIN assuming that the old entity had one?

Third, how does a business owner decide whether to change entities or close one business and open a new one? Let's assume that we are dealing with a small business and that there is no change in ownership and that there are only a few owners.

[S T]

Ein #

I believe all sole proprietors that have employees on payroll need an EIN#.

Generally speaking I believe that sole proprietors that have 1099'S to issue for independent contractor reporting will use their Social Security #.

Calif always keeps the same EIN # assigned regardless of change of entity, however, I believe Federal requires a new EIN#, except maybe as John mentioned going from Sched C to a Single LLC.

Sandy

[oceanlovin'ea]

Very nice

I watched a demonstration of the new process at the IRS Forum in Orlando Tuesday afternoon. Very easy to do.

I think this will help us with our clients a lot. Just having to answer the questions that apply to the entity that you are creating will make it a much easier process.

Linda F

[Uncle Sam]

EIN Process

"a much easier process."

Easier - for whom - the client or the practitioner?

This new age of e-everything where all you do is click a button - and bingo - magic happens.
Do these clients consider making a hard copy of what they're doing? Do the computer prompts advise them to?
And just like bookkeeping/accounting clients that do things on their own - are they doing it properly or are they doing it just to save money having not to pay you so they can say "I did it for you to so you don't have to do all that work". Then you find out they made 1000 mistakes and you have to UNDO what they did on their own.

[outwest]

My take..

"a much easier process."

Easier - for whom - the client or the practitioner?

This new age of e-everything where all you do is click a button - and bingo - magic happens.
Do these clients consider making a hard copy of what they're doing? Do the computer prompts advise them to?
And just like bookkeeping/accounting clients that do things on their own - are they doing it properly or are they doing it just to save money having not to pay you so they can say "I did it for you to so you don't have to do all that work". Then you find out they made 1000 mistakes and you have to UNDO what they did on their own.

I guess the proper answer is easier for the user. Which may be the individual or the practitioner.

Yes, it does clearly warn you to print, even tells you what do do if you can't print, and warns you this is your last chance to print.

You know, I'm not sure if I agree with the philosophy that if the individual doesn't understand all the issues, let's compound the problem by making the process hard. I don't think it's the job of the SS-4 to weed out the stupid. To the extent we can, I think we should engineer problems out of processes rather than add to them. IMHO

One caveat: Nothing is foolproof to a sufficiently talented fool. The determined will still foul it up, but a little design work can cut down the overall rate.

Last thought, if I have to straighten out their mistakes, don't I add perceived value to my knowledge and services? And I charge for services, whether routine or problem fixing. Actually more for problems.

[Black Bart]

All good points, outwest and

I guess the proper answer is easier for the user. Which may be the individual or the practitioner...You know, I'm not sure if I agree with the philosophy that if the individual doesn't understand all the issues, let's compound the problem by making the process hard. I don't think it's the job of the SS-4 to weed out the stupid. To the extent we can, I think we should engineer problems out of processes rather than add to them...

that's the progressive enlightened view, but Sam's got good points too. And, at the risk of being cynical, "easier" means less business for us. For example, I have several small clients that were happy as clams using 941s. The ones that didn't owe enough to make deposits got caught up every three months, but with the 944 they now either have to make deposits or owe a big wad at year's end. So...they make deposits, but now I only get to make one report per year instead of three. No matter how you explain that to a customer, he's not buying the argument that one form is just as much trouble to fill out as four. And now I charge less -- what else can I do?

And online procedures are fine, but not necessarily for us. Just this year a client cancelled his appointment with me to file for an LLC and later said he did it online in minutes, paid the franchise fee with a credit card, and printed out the articles immediately. Goody for him and hurrah for the government, but I'm not exactly thrilled about this "progress."

...if I have to straighten out their mistakes, don't I add perceived value to my knowledge and services? And I charge for services, whether routine or problem fixing...

We do charge for mistakes and you can get a pretty good fee for such, but, trouble is, those things don't come up that often and, meanwhile, our regular and routine "bread-and-butter" work is disappearing.

I know I'm old-fashioned -- "stuck in the 70s (or somewhere thereabouts)" -- and IRS is going to do whatever's best and cheapest for them with no regard for us at all, but I don't have to applaud while they're cutting my throat. I complained about something like this (flat tax, I think) once before here and an indignant poster, highly offended, said he certainly hoped he would be a "better person" than to allow the elimination of his job to take precedence over the "greater good." Which is all well and good if we're looking for an '85 Escort and a double-wide, but I told him there's such a thing as being so open-minded that your brains fall out. I generally want to help my customers, but many of them don't hesitate to take full advantage of any avenue to cut you out of the loop (for example: "I filled out this form and what would you charge me to look it over?").

[outwest]

On an individual client basis..

it's sure true that the services we provide may change. Quickbooks has the potential to reduce the writeup work, turbo tax the preparation, our secretary of state has an online, one page LLC form, etc.

My adaptations: I don't do as much writeup but do a lot of fixing, setup, and teaching how to use that information to control the business, turbo tax takes care of the low end people I can't do much for and provides a fair amount of fouled up returns to fix, and I point single person operations to the web-LLC registration, then tell clients let's check my 32 item list to choose the best tax entity. Then I'll file the SS-4 to make sure the IRS gets the right stuff and file the state permit applications. It's a one time thing, you need to get going on the customers that are going to make you money.

You could see some of these developments lowering the entry barriers increasing the number of people giving business a try. Perhaps we have less work for a particular client, but the pool of prospects may be higher with lower entry barriers. And, because that pool seems to have less business experience, maybe room for other services. Flip side of that less sophisticated pool is a lot fail and they don't always appreciate what you do.

Don't know exactly how this will shake out for us. Do know that our environment is going to continue to be dynamic and changing, and chances of survival are better if you are looking forward.

Gotta admit, I did like the late 80s and early 90s. We had computers, but getting them to work made me a lot of money.

[DEO]

New EIN does not work for me.

I was just attempting to obtain an EIN for a client. I have e-filed the client personal tax returns for the past 4 years. I used the same name and SSN. IRS claims it does not match their records. I tried about 3-4 times, now I am locked out, unable to provide an EIN through online assistant. Previous SS-4 form were much simple, you were able to see all the info you actually typed.