You might want to launch several firms at once if you’re an entrepreneur. But before you accomplish that, you must comprehend how your company is governed by the law. One common legal structure for small firms is the sole proprietorship. A sole proprietorship is a business structure where the owner is the only one in charge of running and managing the company. The good news is that a sole proprietorship can contain many firms.
When submitting income tax returns, you can combine all of the income and costs of the firms that are part of a sole proprietorship. As a result, you won’t need to file separate tax returns for every firm. You must still maintain distinct financial records for each business, though. This will make it easier for you to comprehend how profitable each company is on its own.
As a result, you are able to modify your company name while maintaining your EIN. The IRS issues each business an individual nine-digit number known as an EIN (Employer Identification Number) for the purpose of taxation. You may easily inform the IRS if you need to alter your company name by submitting Form SS-4. Both your previous EIN and the new business name must be provided.
You cannot utilize your previous EIN number to launch a new business. Every company has to have a unique EIN. This is so because each business’s EIN is a special identification number. When submitting your tax returns, it may become confusing if you utilize the same EIN for many firms.
Your choice between an LLC and a sole proprietorship will depend on the type of business you have. If you are operating a small business and want to keep costs down, going solo is a fantastic alternative. However, an LLC is a preferable choice if you wish to shield your private assets from company responsibilities. Limited liability companies, or LLCs, are distinct from their owners legally. This means that business debts and liabilities are not able to attach to the owners’ personal assets.
Finally, every series LLC requires a unique EIN. An LLC type known as a series allows you to make different series or cells within of the same LLC. Each series has its own members, assets, and responsibilities. For tax purposes, each series must have a unique EIN.
In conclusion, it is feasible to operate many companies as a sole proprietorship. When you file your tax returns, you can aggregate all of the revenue and outlays from the businesses. However, each company needs to have its own EIN and accounting documents. By contacting the IRS, you can keep the same EIN if you want to alter the name of your company. Think about the nature of your company and the degree of asset protection you require for your personal assets when deciding between an LLC and a sole proprietorship. Finally, every series LLC requires a unique EIN.
In the end, it will rely on your unique circumstances and objectives. Multiple LLCs might give each business extra protection as the liabilities of one business won’t effect the others. However, since you would only have to pay one set of taxes and paperwork, having many DBAs under one sole proprietorship might be easier and more affordable. To establish which choice is best for you, it’s crucial to speak with a legal or financial expert.
You must obtain a new EIN for the additional business if you want to add it to your existing EIN (Employer Identification Number). An existing EIN cannot be transferred to another company. Every company needs a separate, individual EIN. You can request a new EIN by fax, mail, or online through the IRS website.