1. Home
  2. Taxes General Forum
  3. EIN questions - when is a new one needed?

EIN questions - when is a new one needed?

Situation:

  • Relative started business #1 years ago as a sole prop.
  • Relative got an EIN and used it to open a solo 401k
  • Relative started business #2 a couple of years ago also as a sole prop.
  • There are no employees at either business.

Relative will likely turn business #2 into a single-owner LLC (still with no employees) and NOT make the S-corp election at this time. Which as I understand it means it is a disregarded entity and gets reported as sched-C sole prop on the relative's return.

Questions:

  • If relative wants to (or is required to by bank) to have an EIN to open an account in the name of the LLC, can the EIN used for the solo 401k be used? Or should the relative get a new EIN just for use by the LLC.
  • As long as the LLC remains single-owner, no employees, can the existing solo 401k continue to be contributed to?

Relative is thinking about maybe being in a position to have employees in 2022. At that point the LLC will need an EIN if it doesn't already have one, presumably. And again, that should be different from the EIN used when setting up the solo 401k?

Next round of questions:

  • As I understand it, once the business has a non-spouse employee it can no longer have a solo 401k. What happens to the existing 401k? Can it continue to exist have have contributions made to it solely based on business #1's earnings (business #1 is a sole prop and has no employees).
  • Relatedly, if you run multiple businesses that are taxed as a sole prop and only one business has employees, does that mean they all are basically considered to have employees since being all taxed as a sole prop they are considered "unified" under the taxpayer?
  • If the answer to that is yes, is there any way to have the LLC be considered truly its own business and the employees considered to belong only the the LLC and not the other business? Would electing S-corp status for the LLC do this? Would doing so allow the original solo 401k to exist and be contributed to from business #1 earnings?
  • If the LLC sets up a 401k plan for relative and other employees, I assume that another new EIN should be obtained, to be used just for that new plan?

Think that's all...for now :)

Reply to
Rich
Loading thread data ...

In article snipped-for-privacy@googlegroups.com you write:

formatting link
This says that the LLC can use the owner's EIN or SSN. The IRS discourages disregarded LLC from getting an EIN and encourages you to use your SSN.

I can tell you from experience that if you use the EIN for the LLC, it will fail the IRS's taxpayer match which only knows about the name of the original business.

I suppose so. Or open a SEP which has similar rules.

It if has employees, it needs its own EIN. See the IRS doc linked above.

Dunno about the other stuff, since I've never had employees.

Reply to
John Levine

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.