I just formed a LLC, do I need EIN for tax purposes?
Thanks!
From my perspective, i have an EIN for my LLC. Your ein data will be eventually be sold to banks so that you will get business credit offers that you can apply in the name of your llc. Then it wont be reflected in your credit score othere than as an inquiry. Hope this helps you. I’ll let the more knowledgeable members answer, this was one of the main reasons I formed the LLC to get the EIN.
steve
If your LLC is a disregarded entity that has no employees, then you don’t need an EIN. You can still get one if you wish, otherwise just use your SSN.
Ok, if I’m going to use my SS# then, could I put my properties under the company name? Can I name the title under my current company?
Thanks!
I would reccommened the EIN number opposed to your social security number. Also I also suggest for each property, a seperate LLC.
Are there any tax benefits if I get an EIN compared to using my SS#?
THanks!
None at all. Your taxes will be the same whether or not you have an LLC, regardless of the presence or absence of an EIN.
You want to use your EIN because the objective of a corp is to build its credit and remove your credit from the company. If you have to many loans on your personal social security number then you will kill your score plus any late payments or defaults will go directly to you. You want your company to be responsible for its debts not you personally. You should look into establishing more than 1 company and start establishing some credit for each corp you start. It will take 2 yrs to get a decent credit score once your started…get some gas cards to start out in the corp name…
Let’s not overlook the original question.
I just formed a LLC, do I need EIN for tax purposes?
You have received responses telling you to get an EIN to build credit history in your company name. The rationale is that you want to get financing stuff out of your name and away from your credit report.
These are good reasons, but the answer to your original question is still unchanged in your situation – you don’t need an EIN for tax purposes.
Thanks everyone! I really appreciate it!
Get the EIN. It’s free and easy. You just fill out one easy form.
NO you don’t need it for tax, but you are in an investment forum. It really helps to have credit in the company’s name instead of yours. I have several bank accounts and credit cards in the company name instead of my own and it’s great.
I find that it helps keep my score and debt ratio higher because my social doesn’t show the debt of the companies.
William,
An LLC is not a corporation. An EIN is not required if the LLC is a disregarded entity and has no employees.
Howdy yall,
since were on the subject of personal debt and credit, can a person put their personal debt (credit cards, LOC for down payments on properties) under their newly established LLC? Since an individual didnt have knowledge about an LLC and their credit is low because of the excessive debt, can they now take his/her personal debt and put it under the new LLC?
git er dun
Excellent point Dave when would the LLC be a disregarded entity? If the entity is disregarded then their would be no tax saving to the individual as well as any type of assett protection. There is a form called a 8832 Entity classification form Th Internal revenue service recognizes all newly formed LLC’s as 1065 partnerships unless this form is filed to be able to classify the LLC and the way it shoudl file its taxes. On this form it could be taxed as a c Corp a single member LLC a Partnership a Foreign Partnership or a Foreign Corporation. Diregarded entity’s only exist in the way of formation out of the country or “Off Shore” entities. Just get the number and be done with it. If not pay 30% in taxes every year
While we are on this topic, I was wondering how can we check the credit of an LLC?
A Limited Liability Company (LLC) is a business structure allowed by state statute. LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC (asset protection in that the liability exposure is limited to the assets of the LLC and does not extend to the members personally). Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation. The pass-through taxation, in general, makes the LLC tax neutral. That is, the tax liability to the taxpayer is the same with or without the LLC.
Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single member” LLCs, those having only one owner.
A few types of businesses generally cannot be LLCs, such as banks, insurance companies and nonprofit organizations.
There is a form called a 8832 Entity classification form Th Internal revenue service recognizes all newly formed LLC's as 1065 partnerships unless this form is filed to be able to classify the LLC and the way it shoudl file its taxes. On this form it could be taxed as a c Corp a single member LLC a Partnership a Foreign Partnership or a Foreign Corporation. Diregarded entity's only exist in the way of formation out of the country or "Off Shore" entities. Just get the number and be done with it. If not pay 30% in taxes every year
Apparently, you don’t understand the IRS term “disregarded entity” or the use of Form 8832.
First, Single member LLCs.
Generally, when an, LLC has only one member, the fact that it is an LLC is ignored or “disregarded” for the purpose of filing a federal tax return. Remember, this is only a mechanism for federal income tax purposes. It doesn’t change the fact that the business is legally a Limited Liability Company.
If the only member of the LLC is an individual, the LLC income and expenses are reported on Form 1040, Schedule C, E, or F. If the only member of the LLC is a corporation, the LLC income and expenses are reported on the corporation’s return, usually Form 1120 or Form 1120S.
If you prefer to file as a corporation instead of as a “disregarded entity” Form 8832 must be submitted. Otherwise, you don’t need to file Form 8832.
Single-member LLCs may not file a partnership return.
Now for Multiple Member LLCs
Most LLCs with more than one member file a partnership return, Form 1065. If you would rather file as a corporation, Form 8832 must be submitted. You don’t need to file a Form 8832 if you want to file as a partnership.
Refer to Treasury Regulations Section 301.7701-1,-2,-3 for more details.
Have had 2 DBAs which we had to record ‘ficticious names’ for in order to get checking accts.
we are making them each LLCs now.we are changing banks for one & of 3 banks, none will open an LLC business acct without the EIN. Our tax guy says we have to have the EIC
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You are a sole proprietor doing business under fictitious names. Now you want to turn your sole proprietorships into formal business entities and you have selected the LLC.
Provided your LLC has no employees and you continue to operate as a sole proprietor (a disregarded entity to the IRS), then what can I say? Your tax guy is too lazy to look up the law, and is just shooting from the hip?
The bank needs a tax id for your bank accounts. The new accounts customer service person just knows that the bank procedures require a tax id. He/she needs a nine digit number to put on the account application in the space labeled EIN. Just use your SSN when they ask for your entity’s EIN.
Think about this for a minute. As far as the IRS is concerned, a disregarded entity does not exist for tax purposes, so why would the IRS insist that your entity have an EIN – it is not filing a tax return in its own right after all.
Let me repeat, you can always get an EIN for your business entity, but it is not required for the disregarded entity that has no employees – your SSN will suffice.
Hmmmm Well actually the tax guy is very good… maybe I didn’t explain well to him but he felt since we were no longer empl. by anyone & now doing REI full time for ourselves, it would be best too get one…
as far as banks go, I asked if we could just use our SS# & they all said no…
wonder if i can ‘cancel’ the number… :-\