Discussion:Disregarded LLC owned by S Corp require separate EIN?
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Disregarded LLC owned by S Corp require separate EIN?
| 25 April 2006 | |
| Client has small S corp of which he (and occasionally his kids) is the only employee. As owner-employee of the S corp he pays himself wages but is exempted from state disability insurance. He set up an LLC to start a second business recycling computer equipment. The S corp is the sole member of the LLC which is being treated as a disregarded entity. The state requires all employees of the LLC to be covered by SDI in order to participate in some recycling program. He does not want to elect coverage at the S corp level because he figures he will pay more in SDI than if he gets coverage as an LLC employee for relatively few hours. So the question is, can the LLC obtain a separate EIN and report payroll separately from the S corp even though the LLC is a disregarded entity for income tax purposes? | |
| 25 April 2006 | |
| I believe you check other on SS-4 application and write in single member LLC. As far as payroll, I would think the LLC would have to pay him directly. | |
| 25 April 2006 | |
| If you are in California then the LLC needs a separate Federal EIN to file Form 568 (pages 1 & 3 only) which is required even though it is a disregarded entity for tax purposes. You can also have a separate California Employer ID number for payroll purposes. | |
| 25 April 2006 | |
| I know you can get an EIN. I have LLCs-Sch C and LLCs-Sch E that have their own EINs, because the clients wanted bank accounts that weren't in their own SSNs.
You could have several Sch C's on your 1040 and they could each have their own EIN and file separate payroll tax returns, so I don't see why you couldn't do it for your LLC. | |
| 25 April 2006 | |
| I suspect any tax saved by reporting only the time spent on the recycling activities of the LLC for the SDI (as opposed to all of his activities if he elects optional SDI coverage as corporate officer) will be more than eaten up by the administrative costs associated with the second set of payroll tax returns required if the LLC has a separate payroll, but I wanted to check out the alternatives. | |
| 12 April 2007 | |
| Most banks around here (California) require an EIN number to open an LLC bank account, so for the single member LLCs I form for clients, the vast majority end up with EINs, despite the IRS apparently discouraging it.
As above, yes, check box Other on the SS-4 and write in SINGLE MEMBER LLC or DISREGARDED ENTITY - SINGLE MEMBER LLC. When it comes time for such an entity to pay tax - on the Schedule C, does the sole member's SS# go in the SS box I presume? Or is the EIN used and then this is attached to the 1040? Client with new LLC is asking and doesn't plan to see accountant until tax filing time next year... thanks. | |
To join in on this discussion, you must first
log in.
