I finally got around to establishing my own LLC last night (single member LLC, no employees now or in the foreseeable future). Now, since I'm in the business of buying and selling, I'm looking to branch out and deal with wholesalers directly, almost all of which require an EIN. My question here is, when I go to the irs site to apply for the EIN, it asks what type of EIN I'm applying for. I've heard people say 'sole proprietor' is easiest for tax filing purposes (can just file it on your schedule C), but when I select 'sole proprietor', it states the following: I just checked the irs site, and it said this on the EIN application when I selected 'sole proprietor': Sole Proprietor A sole proprietorship is a business that has only one owner and is not incorporated or registered with the state as a limited liability company (LLC). A sole proprietor can be a self-employed individual or an independent contractor. Sole proprietors (self-employed individuals) report all business income and expenses on their individual tax returns (Form 1040, U.S. Individual Income Tax Return, Schedule C, E, or F). A sole proprietor may or may not have employees. So I'm assuming a single member LLC ALSO HAS TO apply for an LLC EIN, and is not qualified for a sole proprietor EIN? Are there any downfalls to an LLC EIN? Again, I just want an EIN in order to deal with wholesalers and also to open up a new seperate checking account for my business, which would make my life easier. People with personal experience with an LLC, please chime in. And lastly, if I'm designing my own website for my company and hiring temporary 'freelancers' or 'aid', they don't technically qualify as 'employees', correct? Can they just be written off as 'freelance business expenses?' I was always curious as to how that worked. Just want to make sure I cover all my bases before I start really scaling things up. Thanks in advance!
I totally recommend talking with a CPA or accountant for advice. It all depends on what you want to do and what type of protection you need. For simple basics, a simple google search will give you all the info you need. Sole Proprietor = Basically a business run by a single individual with no protection. Someone sues your company or you run a debt, your assets under your name are in peril. There is no distinction between your company and yourself as an individual (including taxes). Pros are low costs, limit risks to investors, etc... Basically all drawbacks to SPs are advantages to LLCs and vice versa.
Appreciate the reply. I already understand the SP vs. LLC differences, and I already have a state issued LLC. My only question now are my viable options for type of EIN I can apply for. Just wanted to make sure I should still be filing for an 'LLC EIN' and not a 'sole proprietor EIN', since there are those two different options. At this point it does seem like the LLC EIN is the way to go, but just was curious how taxes would be handled in this case. Thanks again
IANAL or Accountant, but: Apply for an LLC EIN. You'll state that there's only 1 owner, so it will initially classify you as a disregarded entity (meaning they don't treat it separate from you) for tax purposes. Your taxes will be filed on your 1040 schedule C (like a SP would)
an LLC is special. You can actually decide how your LLC is taxed mine is taxed as an S Corp. It all depends on how your LLC is structured (this is besides the fact that it is a single member LLC)
For type of entity select Other (specify) and write Single member LLC. Your reason for applying should be ''Open a bank account''. Why don't you actually apply over the phone? This is the quickies way to receive your EIN. It takes no more than 30-40 minutes, if you apply over Internet it takes about 4 weeks. I do not think that freelance services are employees, but you should definitely consult with laywer or accountant. Hope that helps you out
