Choosing the appropriate business structure is essential when beginning a business. The limited liability company (LLC) and the sole proprietorship are two of the most common business formats. The simplest and most typical type of business form is a sole proprietorship, whereas an LLC provides additional flexibility and security. But is it possible to use the same name for both an LLC and a sole proprietorship?
The quick answer is that you can have both an LLC and a sole proprietorship with the same name. Due to confusion and possible legal problems, it is not advised. A business name is instantly protected from being used by another company when it is registered with your state. In other words, if you register a company name as an LLC, no other corporation or LLC in the same state may use the same name.
The same protection is not provided if a sole proprietorship is registered under the business name. The identical name may still be used by other companies, which could lead to misunderstanding and legal problems. It may appear that your sole proprietorship and your LLC are one and the same if you have an LLC with the same name. If something goes wrong with one of the enterprises, this could result in legal challenges and liability problems.
Therefore, even though it is technically feasible to have an LLC and a sole proprietorship with the same name, it is not advised. In order to prevent ambiguity and legal concerns, it is preferable to give each business a distinct name.
How many EINs (Employer Identification Numbers) are permitted is another often asked issue. An EIN is a distinct nine-digit number that serves as your company’s tax identification number. A unique EIN is required for every company entity, including sole proprietorships, LLCs, corporations, and partnerships.
As a result, if you operate both an LLC and a sole proprietorship, you must file for two EINs. Each subsidiary or branch of your business requires its own EIN. However, you can use the same EIN for all of your LLCs if they are all part of the same parent company.
In conclusion, the answer is that you can have an LLC and a sole proprietorship. However, due to confusion and potential legal concerns, it is not advised to use the same name for both businesses. If you own both an LLC and a sole proprietorship, you must register for two EINs because each company entity needs its own EIN for tax purposes. To ensure compliance with all legal requirements, it’s critical to select the appropriate business structure for your needs and speak with a lawyer or accountant.
While it is conceivable, it is not advised to use the same name for both an LLC and a sole proprietorship. This is because having the same name could confuse customers and result in legal issues even if the two businesses would be regarded as having separate legal structures. In general, it is best to give each corporate entity a distinctive name.