Tax changes to LLC starting Jan 1, 2009 - Virtual Assistant Forums

#1 (**permalink**) 06-10-2008

Can someone smarter than me tell me what this means? I found it here... IRS Website

Recent Changes

In August 2007, final regulations (T.D. 9356) were issued requiring single member LLCs (SMLLCs) to be treated as the taxpayer for employment tax and excise tax obligations. The SMLLC will continue to be disregarded for other federal tax purposes. This change will begin for excise taxes that accrue after January 1, 2008, and for employment taxes that accrue after January 1, 2009.

After January 1, 2009, Notice 99-6 is obsolete and the SMLLC will be responsible for collecting, reporting and paying over employment tax obligations using the name and EIN assigned to the LLC.

I think what it's saying is that after 1/1/2009 SMLLC's will be taxed like Sole Proprietors, ie double taxed. I'm certainly no CPA though... I hope I'm wrong.

#2 (**permalink**) 06-10-2008

This change only has to do with single member LLC's who are employers. If you are a single member-LLC you are taxed as a sole-proprietor, but you do not need an EIN to report income taxes, because you file a Schedule C and you use your social security number. However, some banks will require an EIN to open a checking account, so even though you don't need the EIN for reporting income taxes you can still obtain one, you just don't use this number for reporting taxes it's strictly for banking purposes.

However, if you have employees, you must get a 2nd EIN number specifically for reporting employment taxes.

#3 (**permalink**) 06-10-2008

I have to admit I read this and was a bit perplexed myself - leave it to Rebecka to make chocolate cake out of mud. Thanks for clarifying Rebecka!

#4 (**permalink**) 06-10-2008

Ah, I see, it only affects employers... so even if a VA subcontracts out to another VA, that still doesn't make them an employer. I'm so glad Bri told me about this forum, all I have to do is ask and I learn what I need to know!

#5 (**permalink**) 06-10-2008

I was perplexed by this when I first found out about it. The IRS gave one of my clients who is a SMLLC two EIN's because she has an employee. I think it's retarded that they would make you have 2 EIN's, when one has no purpose at all, other than to open a bank account.

Leave it to the IRS to over complicate something.

#6 (**permalink**) 06-10-2008

True, but I read somewhere else, maybe on this forum, that if a client pays you more than 600 they are required to issue you a 1099, which they would then need your SSN for. I'd much rather give them an EIN.

Although, and correct me if I"m wrong, I thought I saw somewhere that this amount was changing to 750? I could be mistaken, I'm overwhelmed with new information right now.

#7 (**permalink**) 06-10-2008

I use my EIN for completing W-9 forms. I agree, I don't want to give out my SSN either. I haven't heard about a change in the 1099 amount, the IRS website still says $600.00.

Image Building · #8 (**permalink**) 06-15-2008

I agree. I would much rather use my EIN number than my SS#.

#9 (**permalink**) 07-15-2008

I need assistance undersatding the Tax changes to LLC starting Jan 1, 2009. It was brought to my attention yesterday that this is coming. Currently our single member LLCs' taxes are reported through the parent company’s EIN. If I understand the IRS publication, effective Jan 1, 2009 each of our single member LLC will need to file its own taxes under its own EIN. Is this correct? In addition, is anyone aware of exceptions, is this mandatory for all single member LLC effective Jan 1, 2009.

#10 (**permalink**) 07-17-2008

The IRS gave me two EIN's, one as a sole proprietor, one as a business. They also told me that the sole proprietor number I should file away and don't use, to use the business one strictly for my business. So that's what I did!
Viki

#11 (**permalink**) 07-17-2008

This new law for SMLLC's is very confusing and I don't see the point of it at all. One EIN is to be used only if you have employees to file the payroll taxes and the other EIN is used soley for functioning as a business, to open a bank account, etc. but you can't use it to file your taxes. You must file your income taxes under your social security number.

#12 (**permalink**) 07-17-2008

Our LLC subsidiary has a parent company and through the parent company taxes are reported. The LLC does have employees, currently the taxes are being reported through the parent company's EIN and not under a social security number. In addition, the employees are being paid through the parent company. Are there additional publications anyone can recommend regarding the change? The IRS website does not help much.

#13 (**permalink**) 07-17-2008

Rose, the tax changes only affect single member limited liability companies. How is your LLC set-up?

#14 (**permalink**) 07-17-2008

Rebecka, our LLCs are single member. The LLC does not have employees that roll up to the LLC, the employees who work at the location of the LLC are the parent companies' employees, for that reason we have been paying payroll and reporting taxes through the parent company. So, I am not sure if the tax change applies in this situation or does it?

#15 (**permalink**) 07-17-2008

I would just continue to do it as you have been. The IRS will send you a notice if they want you to make a change.