hello. i wanted to open a business account for my new llc but they require an EIN number. not sure i want to get one because I don’t know how it will affect me. i don’t have employees for now so I really don’t need one except for the fact that I want to open a bank account and start establishing business credit. i don’t want any added tax headaches when it comes to filing taxes. does anyone else have an EIN number for their llc and why did you get one?
Only the single member LLC doesn’t have an EIN and that set up is not very useful for a real estate investor.
The bank just needs a tax id for the IRS reporting. Since the single member LLC without employees is not required to have an EIN, use your SSN. That should work just fine for the bank and for your income tax reporting.
thanks for the advice. spoke with the bank and they said a ssn will work instead of an ein. btw, is having a business bank account better for tax purposes?
BLL, why do you say a single member llc is not useful for a real estate investor? what do you recommend/have?
A SMLLC is not useful for the typical RE investor because there is no charging order protection. Since the single member is the person who will be held responsible for any LLC liability, the LLC will be liquidated to pay the debt and it only takes an $11,000 judgment to force the single member into involuntary bankruptcy, where the LLC will be liquidated.
As to an alternative to the SMLLC, that is for a qualified planner who evaluates your situation to decide. LLCs are not a solution. They are tool that works in conjunction with other tools to create a plan that meets your needs.
an individual can still obtain an EIN for use by the business. I usually recommend one just so people don’t have their SSN floating around on every W-2 or 1099 they send out.
Just to piggy-back on Mark’s comment:
If your single-member LLC has employees (that is you are issuing W-2s), then the IRS requires your LLC to have an EIN. Using your SSN is not an option for this case.
I have a SMLLC that I do all my real estate business through and I got an EIN for it the day I opened the LLC and got the certificate of formation from the state. IIRC, I did it all through the web and it took only minutes.
Good job getting incorporated! I use several single member
LLCs and I think anyone halfway serious about this business
should as well. As for the EIN you can get one in 2 minutes by going to
Even though no one mentioned this, you should hire an
EA(enrolled agent) or CPA to help you with all the deductions
you can claim like start-up expenses, home office, vehicle, meal, etc. :cool
The tax savings for you can be significant and since smLLCs
are flow through entities you may (through proper tax planning)
have little to no taxes to pay.
Hope this helps!!
A flow-through SMLLC is tax neutral. That is, you have the same tax liability on your personal tax return with the LLC as you would have without the LLC. Tax planning may help reduce your tax burden, but the result of your planning will not be affected by the presence or absence of the LLC.
A new case has made SMLLCs even less useful. Check out Olmstead v. FTC for the details.
This Decision highlights what I’ve seen you post all over the boards about a SMLLC being ineffectual in protecting LLC assests against charging orders, and for lack of legalese, someone being able to just take everything in the LLC for debts owed. One of the key components that I garnished from this is the importance of having an LLC that includes multiple members and that an operating agreement that requires all of the members to have approval rights of transferability of ownership. It also talks about the heightened protection that Partnerships and LLP’s have higher protection of assets then a SMLLC.
As my portfolio grows I can definitely tell you I won’t be operating any of my assets inside of an SMLLC. Of course, I am not a lawyer, and wouldn’t even play one on TV, so I leave these legal organization to a highly paid lawyer who protects me and my assets.