I hope I am not repeating this...so much wonderful information here at this lovely forum......excitingly overwhelming, in a good way.

I am a sole proprietor and used my SS # for my home business last year when we filed our income tax return. I like the idea of getting an EIN for privacy issues, posted on the W9 thread. I had not thought of that at the time.

My question is when I get my EIN number, how will that affect filing your yearly income tax, are you able to file the same as if using your SS # or will the business have to be filed separately?

I am also thinking that if I decide to change my business to an LLC in the future, the EIN will already be in place.

If you get an EIN as a sole proprietor there will not be any change to how you file your taxes, you will just enter the EIN number on your 1040 Schedule C.

For an LLC it depends on what type you are whether you will have to file a seperate tax return or not. If you are a single-member LLC there will not be any change, you will continue to file a Schedule C, if you are a multi-member LLC then you are considered a partnership and will file Form 1065 for a partnership, the partnership will issue you a K-1 Form showing the income you will have to report on your personal return.

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Rebecka Melson ~ Virtual Business Services

You can file all on one form. I did so last year. EIN is a smarter way to go.

I just completed the LLC process and it wasn't hard to complete. I used a web site called http://www.tax9er.com/ to file my EIN which I recieved instantly.

Additionally it walks you through the process for 8832 which is sent to the IRS. All this is needed to open a business account in your business name. Plus I can still file taxes as usual.

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Monique Terrell, CEO
Sparkle Professional Office Services, LLC
www.sparkleofficeservices.com

You can apply for your EIN online directly throught the IRS at no charge. They will issue your EIN immediately and then send you a confirmation letter in the mail along with your entity classification.

Apply Online Now

If you need to change your entity classification you can get Form 8832 directly from the IRS also at no charge.

For security reasons I would recommend going directly through the IRS website for registration.

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Rebecka Melson ~ Virtual Business Services

Well that just sucks for me :-(

Live and learn thanks for sharing Rebecka.

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Monique Terrell, CEO
Sparkle Professional Office Services, LLC
www.sparkleofficeservices.com

Monique, if you are now an LLC, you will have to file separate taxes for the LLC and then one for your personal self. You might want to make sure you actually filed an LLC. You would receive a state number also along with the legal documents of your LLC that are filed with the state. You will also be required to do annual minutes for the LLC which need to be filed with the state and also have a business license.

Mary

If you are single-member LLC you only need to file a Schedule C along with your personal return, you do not need to file a separate tax return. If you are a multi-member LLC then, yes, you would have to file a Form 1065 Partnership tax return.

The only reason you would receive a State ID number is for purposes of filing employee withholding, if you do not have employees this is not something you need to worry about. Having employees comes with a whole other set of forms and headaches.

Also, you will need to check your State, but here in Oklahoma, you do not have to file your minutes with the State. Corporations however are suppose to file documents with the State, but a corporation is not the same as an LLC. Business licenses vary by State as well, in Oklahoma you only apply for a license for purposes of filing sales tax, but here we do not charge sales tax for services/labor, only goods, therefore, being a service based business I am exempt from charging/paying sales tax.

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Rebecka Melson ~ Virtual Business Services

Thank you all for the great info.

I will start out as a sole proprietor, then as my business grows, will convert to the LLC.

I presently live in Alaska and am moving back to Texas next spring. I am currently trying to familiarize myself with the laws in Texas. Here in Alaska, you must have a business license for each entity you operate....and charge/pay sales tax for my services. I know that is not required in Texas. And for my client in Texas, no worries about sales tax. will know more when I talk to Alaska.

I will contact the county I am relocating to and find out about the process of a DBA, I was told by the state to contact them.

I also will contact my current state, I may have to buy a business license for the rest of my time here for my new business.

I am still trying to decide on a business name. I don't want to use the one I have now for my new services.

Very good information. Just setting up and this is an area I really need to understand more. Thanks, Pattyben