In March my client converted her Schedule C business into an LLC. We will be treating the LLC as a disregarded entity. So from past discussions about this, I will prepare only one Schedule C for 2007 covering the period Jan-Dec. I assume I should enter the LLC's EIN in item D on Schedule C (the old Schedule C business did not have an EIN). When I prepare the 1099 Forms for her independent contractors do I use her SS # or the EIN for the LLC as the payor's ID #?
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Use the new EIN for the LLC for item D on Schedule C, and for all 1099s. -
a second EIN
IRS may soon be requiring SMLLC's, if they have a payroll, to have a second EIN just for the payroll. But there is much confusion on this and I would cross that bridge when we come to it.Comment
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I would
have all schedule C owners apply for an EIN. I don't want to put their social security number on a 1099 going who knows where.Comment
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Second EIN I could see if first EIN was for ABC biz and second was for ABC, LLC.Comment
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Reason for 2 EIN's and LLC
The first EIN is for the LLC. The second is for the owner to be used for payroll. The IRS wants the owner to be personally liable for a disregarded entity.Comment
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Was there a court case?
I think that this question went to court already (several years ago) and - much surprise here! - depending on how the proprietor/LLC owner filled out the SS-4, the owner might be found liable for the PR taxes anyway...Comment
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The single member owner of an LLC IS liable for payroll taxes, regardless of whether there is one or two EINs. I read that court case too.
Having two EINs is not needed.
I stand by my comment. The only reason to have two EINs is so that the rules can be more complicated.Comment
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Excise Taxes are coming
What is on the horizon is Federal level Excise taxes on LLC's. Congress/IRS wants a separate EIN for payroll vs other Federal Reporting (Excise taxes). They are moving slowly on this, but 10 years from now we will look back and say "what happen", the LLC scene will have totally changed.Comment
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