Get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) before deciding to create a Limited Liability Company (LLC). An EIN is a special nine-digit number given to companies to help them be identified for tax purposes. However, when your company grows, you might opt to switch your LLC’s membership structure from single to multiple, or vice versa. You might be wondering if you need to file for a new EIN in this situation. Let’s investigate this issue in greater detail to gain a thorough grasp.
If you were a sole proprietor before you decided to become an LLC, you must file for a new EIN. This is so that the EIN can assist distinguish an LLC from the owner’s Social Security number since an LLC is a separate legal entity from the owner. However, you often do not need to obtain a new EIN if you are changing from a single-member LLC to a multi-member LLC. Because the IRS does not view this as a change in the entity’s structure, this is the case.
A DBA (Doing Business As) is a fictional name that a business employs to conduct business; it is not a different legal entity from the owner. Consequently, a DBA is not necessary to have a separate bank account. To keep your business finances separate from your personal affairs, it is advised that you open a separate bank account for your DBA.
A solo proprietor must, in fact, submit taxes. As a sole proprietor, you must attach Schedule C to your personal tax return (Form 1040) in order to detail your business’s earnings and outgoings. Self-employment taxes, which also include Social Security and Medicare taxes, are another obligation.
If you paid a contractor or freelancer $600 or more for services rendered on your behalf during the course of the year, you are obligated to send them a Form 1099-MISC. Even if you paid the contractor $600 or more, you are not required to issue a 1099-MISC if they are a company.
In conclusion, you usually do not need to obtain a new EIN if you are changing from a single-member LLC to a multi-member LLC. However, you must file for a new EIN if you are creating a new LLC or substantially altering the structure. Opening a separate bank account for your DBA is advised, and as a sole proprietor, you must file taxes and, if necessary, issue 1099-MISC forms.