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Last Post:
Mar 1, 2007 2:14 PM
by: Kevin R. Minkof...
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From:
Portland, Oregon
Registered:
3/1/07
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EIN number for Domestic LLC with S-corp question
Posted:
Mar 1, 2007 1:18 PM
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I am classified as an LLC in Oregon. However, I am now wading through the documents trying to figure out what I need to do in order to get an EIN number now that I have an employee.
I have found that LLC is not an entity on the federal level. If I file form SS-4 and DO NOT file either form 8832 or 2553 "by default, a domestic LLC with only one member is disregarded as an entity separate from its owner.."
I would like to protect mine and my husband's assets and think that the default is not my best option. I believe after doing research that an S-Corp makes the most sense for my business. So I think that based on what I've read, I need to file form 2553 to establish my business as a separate entity from the business owner (me).
Here is the where I am confused:
If I file form 2553 it establishs my business as an S-Corp on the federal level. Do I now have to file something on the state level to become an S-Corp. What if I want to remain an LLC on the state level and an S-Corp on the federal level.
Also, my state registry has my business name listed with 'LLC' after the name. Do I leave the LLC off of the business name on form SS-4 and 2553?
Thanks!
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Posts:
4
From:
East Portland
Registered:
5/30/06
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Re: EIN number for Domestic LLC with S-corp question
Posted:
Mar 1, 2007 2:14 PM
in response to:
Jennifer
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Jennifer:
Don't file for S-Corporation status unless you have enough income (taxable profit beginning at about $75,000) in order to take advantage of S-Corp tax benefits in excess of the additional costs and administrative hassles of an S-Corp. With an S-Corp you will be considered an employee and must pay yourself wages, withhold income and payroll taxes, transmit those payroll taxes (usually monthly), file quarterly payroll tax reports and a W-2 for yourself at the end of the year. You will also have to file a separate Corporation income tax return each year, even though the net profit will flow through to your individual income tax return and is taxable as part of your individual income taxes.
An LLC will give you all of the creditor protection afforded an S-Corporation, and you are not considered an employee - so no payroll. Also, single-member LLCs are considered "disregarded entities" by the IRS and Oregon, so you do not file separate income tax returns. The business income and expenses are reported on Schedule C (and related supplementary schedules) as part of your individual income tax return Form 1040.
Your Oregon LLC should be issued a federal taxpayer ID number. As you mentioned, you do that by filing IRS Form SS-4. You can also file an SS-4 online at https://sa2.www4.irs.gov/sa_vign/newFormSS4.do. Legal name of entity must include the "LLC." Select "Other" in Box 8a and put "Limited Liability Company" in the space.
If you have other questions, or would like assistance with any of these problems, please contact my office 503-252-3988. We provide income tax planning and tax preparation, complete payroll services, bookkeeping, and business management consulting.
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