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Need Some Deductions for 2011?

Don't overlook these!

10 Oddball Tax Deductions

11 Most Overlooked Tax Deductions

Updated for 2011

Tax Identification Numbers

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Employer Identification Number for Multi-member LLC

A multi-member LLC must have a federal tax identification number (EIN) issued to the LLC in the LLCs name. A multi-member LLC is automatically treated as a partnership for federal income tax purposes.

However, an election may be made to receive C corporation tax treatment by filing Form 8832. In addition, election may be made to receive S corporation tax treatment by filing Form 2553. If you elect S corporation tax treatment you don't have to file Form 8832.

Single-Person LLC (SMLLC)

A SMLLC is automatically treated as a sole proprietorship for federal income tax purposes (referred to as a disregarded entity).

However, an election may be made to receive C corporation tax treatment by filing Form 8832. In addition, an election may be made to receive S corporation tax treatment by filing Form 2553. If you elect S corporation tax treatment you don't have to file Form 8832.

EIN Needed for Paying and Reporting Employment Taxes

If you are the sole owner of an LLC (called a single-member LLC, abbreviated - SMLLC) and have employees, you are required to have an EIN in the name of the LLC and must use this number when paying employment taxes and filing employment tax returns.

If you are the sole owner of an LLC and don't have employees or a qualified pension plan, then you are not required to have an EIN. You can use your social security number on your tax returns.

If you previously applied for and received an EIN in your own name when you operated as a sole proprietor and had no employees at that time, but then later, you changed your business's legal status to an LLC and hired employees, this will result in you having two EINs:

The EIN in your own name as a sole proprietor is entered on Schedule C, line D. However, the EIN in the name of the LLC is not entered on Schedule C at all. This EIN, in the name of the LLC, is used when paying employment taxes and filing employment tax returns.

Although a single-member LLC (SMLLC) without employees does not need a separate EIN, you may need one for banking purposes or to satisfy state requirements. In this case, you may apply for and receive an EIN.

Completing Line D on Schedule C

When you file Schedule C, only enter on line D the EIN issued to you in your own name as a sole proprietor. If you don't have such a number, leave line D blank.

Do not enter the EIN issued to the LLC on line D of Schedule C. The EIN issued to the LLC is used to report the payment and reporting employment taxes.

Form 1099-MISC

If you issue Form 1099-MISC to independent contractors, use the EIN issued to you in your name as a sole proprietor in the payers box, assuming you have an EIN in your name. If you don't, apply for one in your own name as a sole proprietor to help prevent identity theft. By having an EIN issued to you in your name as a sole proprietor, you can enter this number in the payer's box on Form 1099-MISC instead of your social security number.

If you have employees as an SMLLC, you can end up having two EINs:

  • One in your name as a sole proprietor used on Schedule C, line D and on Form 1099-MISC in the payer's box, and
  • One in the name of the LLC, used when paying and reporting employment taxes

Multi-member LLC:

An LLC with two or more members must have an EIN in the name of the LLC. Individual members do not need an EIN for themselves.

If an election is made on Form 8832 (C corporation election) or Form 2553 (S corporation election) an employer EIN is required

If no election is made, the default treatment will apply.

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Tax Identification Numbers: Employer Identification Number for a Corporation

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