If you’re thinking about changing your name—whether it’s because of a marriage, a divorce, or just a personal preference—you should be aware of the potential tax implications of when you make the change. The date of the name change, the kind of company organization you have, and whether you have an EIN number all play a role in whether you should alter your name before or after filing taxes.
First off, you must inform the Social Security Administration (SSA) and the Internal Revenue Service (IRS) of your new name if it is a result of a marriage or divorce. You might only need to alter your name with the IRS if you’re changing your name for other private reasons. You must include your new name on your tax return if you change your name before filing your return, it’s crucial to remember this. If your name changes after you file your taxes, you must fill out Form 8822 notifying the IRS of the change.
Changing your name with the relevant state agency is also necessary if you have a business entity, such as an LLC. Remember that the legal standing of your LLC may change if you change your name. For instance, if your name changes before you register an LLC, you’ll need to register a new LLC under your new name. The existence of an LLC may also have drawbacks, such as more paperwork and costs.
You will need to abide by some rules when paying yourself from your LLC. An LLC’s owner is referred to as a “member,” and there are several ways you can pay yourself. One choice is to accept a salary, which you must disclose on your individual tax return. Taking a dividend, which is a share of the LLC’s profits, is an additional choice. Recall that distributions are exempt from payroll taxes.
Yes, a single person may hold an LLC. This kind of LLC is called a single-member LLC, and small business owners frequently choose it. Single-member LLCs are taxed similarly to sole proprietorships, which means that the owner’s personal tax return must include information about the business’s income and losses.
Finally, obtaining an EIN (Employer Identification variety) can help your company in a variety of ways. For instance, having an EIN number enables you to create a company bank account and submit a credit request. Additionally, since you will use your EIN number rather than your Social Security number for business-related activities, having an EIN number can help protect your personal information.
In conclusion, there are a number of variables that determine whether you should alter your name before or after filing your taxes. You must inform the SSA and IRS of your new name if it is a result of a marriage or divorce. Changing your name with the relevant state agency is also necessary if you have a business entity, such as an LLC. You must abide by specific rules and consider the potential drawbacks of establishing an LLC when paying yourself out of your LLC. Last but not least, having an EIN number can help your company in a variety of ways, including by enabling you to create a business bank account and seek for business credit.