I formed a single-member LLC last month. I have no employees, no partners, and I haven't elected S-corp status. I keep reading conflicting things online. Some say I can just use my SSN for tax and banking, others say I absolutely need an EIN. Which is it? I don't want to mess up anything with the IRS or my bank.
LLC Tax
I'm confused about whether my single-member llc needs an ein or can use my ssn
Legally, for a single-member LLC wwith no employees, you can use your SSN for federal tax purposes. The LLC is a disregarded entity by default, so you report income on your personal return. An EIN is not strictly required by the IRS in that situation.
But you'll probably want one anyway. Banks often ask for an EIN when you open a business account, even if the IRS doesn't require it. Some credit unions are fine with SSN, but it's hit or miss.
Why not just get the EIN? It's free and takes five minutes on the IRS site. I got mine the same day I filed my articles.
That's true, but getting an EIN isn't always harmless. If you later hire employees or elect S-corp, you'll need one anyway. But for a solo LLC with no employees, using your SSN keeps things simpler at tax time. Just depends on your bank.
So the IRS won't reject a return with my SSN on it for the LLC? I keep seeing people say you need an EIN for "business credibility."
Credibility is not a legal requirem ent. But if you ever want to open a business bank account, many institutions will not accept an SSN-only application. I ran into that with Chase. They wanted the EIN letter.
Also, using an EIN keeps your SSN out of more places. If you're handing out W-9s or vendor forms, an EIN is better for privacy. Not required, but saer.
Single member here. I used my SSN for two years before I got an EIN. Nothing bad happened. The only reason I switched was because my bank asked for it when I wanted a second account.
To be clear, the IRS does not require an EIN for a single-member LLC with no employees. But if you pay yourself a salary or have employees, you need one. Also some states require it for certain licenses. Check your state.
Alright, I think I'll just get the EIN to avoid headaches headaches later. I don't want to be turned down at the bank. Thanks.
Just make sure you use the EIN for the LLC and keep your SSN for personal returns. Don't mix them up on the W-9. The LLC's name should match the EIN, not your personal name, unless you're a sole proprietor without the LLC.