schedule c for single owner llc

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ketanco
Posts: 98
Joined: Wed Jul 24, 2013 7:09 pm

schedule c for single owner llc

Post by ketanco » Sat Apr 01, 2017 2:14 am

When doing schedule c for a single owner llc, which has no employees, is entry of EIN needed?
I was always entering EIN and my own SSN, along with my name and my LLC name, since several years that I started my LLC.
But an accountant told me that entering of EIN is not necessary, actually we should not, as it might generate the expectation of filing payroll taxes. Can you share your thoughts or experiences?

He even told me that getting an EIN was not even necessary in the first place, until I will have employees.

Spirit Rider
Posts: 8101
Joined: Fri Mar 02, 2007 2:39 pm

Re: schedule c for single owner llc

Post by Spirit Rider » Sat Apr 01, 2017 9:16 pm

ketanco wrote:When doing schedule c for a single owner llc, which has no employees, is entry of EIN needed?
I was always entering EIN and my own SSN, along with my name and my LLC name, since several years that I started my LLC.
But an accountant told me that entering of EIN is not necessary, actually we should not, as it might generate the expectation of filing payroll taxes. Can you share your thoughts or experiences?

He even told me that getting an EIN was not even necessary in the first place, until I will have employees.
He is correct. Neither a sole proprietor nor an LLC needs an EIN unless they have employees, Solo 401k, etc.. He was correct prior to this year about entering the EIN. So, as a professional not only is he not up to date on his knowledge of basic business filings, his claim about payroll taxes is totally bogus.

From the 2015 Schedule C instructions for Line D:
You need an EIN only if you have a qualified retirement plan or are required to file employment, excise, alcohol, tobacco, or firearms returns, or are a payer of gambling winnings. If you need an EIN, see the Instructions for Form SS-4. Single­ member LLCs. If you are the sole owner of an LLC that is not treated as a separate entity for federal income tax purposes, you may have an EIN that was issued to the LLC (in the LLC's legal name) if you are required to file employment tax returns and certain excise tax returns. However, you should enter on line D only the EIN issued to you and in your name as a sole proprietor. If you do not have such an EIN, leave line D blank. Do not enter on line D the EIN issued to the LLC

The instructions for Schedule C have changed in 2016 for line D. They have reversed the instructions. You now do use the LLC's EIN.

From the 2016 Schedule C instructions for Line D:
If you conducted your trade or business as a single-member limited liability company (LLC), use the EIN issued to the LLC (in the LLC's legal name) for a qualified retirement plan, to file employment excise, alcohol, tobacco, or firearms returns, or as a payer of gambling winnings. Do not use the EIN issued to you in your name as a sole proprietor of the trade or business.
Last edited by Spirit Rider on Sat May 13, 2017 7:37 am, edited 1 time in total.

ketanco
Posts: 98
Joined: Wed Jul 24, 2013 7:09 pm

Re: schedule c for single owner llc

Post by ketanco » Sat May 13, 2017 6:01 am

ok so I am confused from the reply sorry,
as a single owner LLC, do I enter my company EIN or just use my SSN?

and if we should not, but we enter, then what happens? I entered it when filing my 2016 tax but I am single owner of my LLC.

what does the new instructions say and where?

Spirit Rider
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Joined: Fri Mar 02, 2007 2:39 pm

Re: schedule c for single owner llc

Post by Spirit Rider » Sat May 13, 2017 8:06 am

ketanco wrote:ok so I am confused from the reply sorry,
I might have mistyped 2016 as 201, but it should been clear that the last paragraph was about 2016.
as a single owner LLC, do I enter my company EIN or just use my SSN?
The 2016 Schedule C Line D instructions are very clear. Follow them based on your circumstances.
and if we should not, but we enter, then what happens? I entered it when filing my 2016 tax but I am single owner of my LLC.
At most it might trigger an IRS letter, but I think that is unlikely.
what does the new instructions say and where?
I quoted you the exact relevant Schedule C Line D instructions. Go read them yourself in the 2015/2016 Schedule C instructions.

MikeG62
Posts: 850
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Location: New Jersey

Re: schedule c for single owner llc

Post by MikeG62 » Sat May 13, 2017 8:15 am

ketanco wrote:He even told me that getting an EIN was not even necessary in the first place, until I will have employees.
As an aside, you may need an EIN to open a bank account in the name of the LLC.
Real Knowledge Comes Only From Experience

Silk McCue
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Joined: Thu Feb 25, 2016 7:11 pm

Re: schedule c for single owner llc

Post by Silk McCue » Sat May 13, 2017 5:52 pm

As a single member LLC it is a disregarded entity and therefore there is no reason to reference it on your tax return. In fact that would just confuse things potentially. If you had 50 employees the rules would be the same. I know this because I did have 50 employees and 15 1099s. You simply file your Schedule C with your SS number. If you have an LLC without an EIN I would be concerned that you MIGHT lack the legal protections of an LLC but I don't definitely know that. Your bank account should be created with your LLC's EIN.

Spirit Rider
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Joined: Fri Mar 02, 2007 2:39 pm

Re: schedule c for single owner llc

Post by Spirit Rider » Sat May 13, 2017 7:53 pm

Silk McCue:

Did you not read my quote of the 2016 Schedule C, Line D instructions.

This has changed for 2016. You most definitely now use the LLC's EIN.

Silk McCue
Posts: 958
Joined: Thu Feb 25, 2016 7:11 pm

Re: schedule c for single owner llc

Post by Silk McCue » Sat May 13, 2017 8:07 pm

Spirit Rider wrote:Silk McCue:

Did you not read my quote of the 2016 Schedule C, Line D instructions.

This has changed for 2016. You most definitely now use the LLC's EIN.
Thanks for pointing this out to me. I sold my business 2 years ago and last filed for 2015 taxes with that circumstance. I was unaware of the change.

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