What business code to use on 5500-EZ when running two businesses?

Nov 15, 2019 2 Replies

Relative of mine has been a writer for years and has used the business code for writing on both the Sched C and the



5500-EZ for the relative's solo 401k.

But in 2018 the relative started another, unrelated line of business (also as a sole prop) and so on the income tax return filed two Sched Cs, one with a business code for a writer and one with the code for the new business.



When the 5500-EZ was filed, the relative kept using the business code that had been in use (the one for writing) as 5500-EZ only has space for one code.



But what should be done? Is it arbitrary which code to use? Should you pick the one for the line of business that had the most income? Are you required to have a separate solo 401k plan for each business?


The instructions for 5500-SF state that multi-employer plans must file 5500, which might imply that you can't file form

5500-EZ in this situation.

However, I have no expertise in this matter.

It might be best to file just one Schedule C.

I would seek informed advice.

Steve

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The answer is on Page 10 of the 5500-SF instructions. You use one business code and it is the one that represents your main business activity.

Assuming this is not a multiemployer plan but a plan for multiple employers, then you can still use the 5500-SF. Otherwise, you would be forced to use the 5500.

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