Does anyone have recent experience forming a single-member LLC from a Sch C proprietorship? What is the latest from IRS? Do they want us to just keep the same Fed ID# or get a new one? taxpaper does have a payroll. thanks for any comment you may have.
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Disregarded Entity
John, you probably know that IRS does not recognize an LLC.
If client is going to remain a proprietorship for IRS purposes, he would most likely not need a new number because there has been no change. Possible exception: if the old proprietorship did not have a payroll, and the "new" proprietorship DOES have a payroll. -
EIN for SMLLC
I thought the IRS issued an EIN for any new LLC, even if ther were no employees. You could use the new EIN on the Schedule C, but apparently it is not necessary. If you want to reinforce the LLC status for limited liability, it might be best to use the new ID on Schedule C.
I have one client who formed a SMLLC for his rent property. In that case I could find no way to enter the ID number of the LLC on the Schedule E. Since it is a disregarded entity there would be no K-1 with which to report it with the EI number.
Another client formed two separate SMLLCs and files two Schedule Cs, one for each ID number. On his return I show the EINs of the LLCs
The IRS probably doesn't care which way you do it as long as the tax is OK.Comment
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From theIRS website:
Question-
"I recently formed a limited liability company (LLC). The LLC has no employees. Do I need a separate Federal Tax ID number for the LLC?
Answer-
No, you will not need a separate Federal Tax ID number for the LLC if you are the sole owner of the LLC and the LLC has no employees. If you are the sole owner of the LLC and the LLC has employees, you will need to get a separate Federal Tax ID number, if you choose to have the LLC report and pay employment taxes with respect to employees of the LLC. If you are not the sole owner of the LLC, you will need a separate Federal Tax ID number for the LLC. See Notice 99-6, 1999-1 CB 321. "Dave, EAComment
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