1. What Is a Single-Member LLC?
2. How to Get a Tax ID Number as a Single-Member LLC 
3. Form W-9 Concerns for Single-Member LLCs
4. Reporting Employment Taxes and Excise Taxes for Single-Member LLCs
5. Corporate Tax Treatment

Although most types of businesses need tax ID numbers, single-member LLCs usually do not. An employer ID number (EIN) is issued by the Internal Revenue Service (IRS) and serves a similar purpose as a Social Security number does for an individual. The EIN is a nine-digit number used to file tax returns for the business. An LLC usually needs an EIN only if it has employees.

An LLC, or limited liability company, must be registered with the state. The laws that govern LLCs vary substantially depending on where the business is established. The owners of LLCs are usually referred to as members. This type of business can be owned by an individual, a corporation, a partnership, or any combination thereof. 

LLC owners can decide how they will be classified by the IRS for taxation. If an LLC has two or more owners, it can be classified as a partnership or a partnership with the IRS. An LLC with only one member can elect to be classified as either a corporation or a sole proprietorship, called a disregarded entity by the IRS. 

If you are the single owner of an LLC, you must file IRS Form 2553 to be treated as an S corporation by the IRS or Form 8832 to be considered a C corporation for taxation. To be considered a disregarded entity, simply file your individual tax return with Schedule C. The IRS will automatically treat your LLC as a sole proprietorship unless you file Form 8832 or 2553.

What Is a Single-Member LLC?

A single-member LLC provides the sole proprietor personal protection from business liability. As with most other incorporated businesses, an LLC structure keeps the owner's assets from being seized to cover business obligations or debts. An LLC has the distinction of also providing charging order protection, in which a business and business assets can't be seized to settle personal debts. 

A single-member LLC also serves as a pass-through entity for taxation purposes. This means LLC owners can pay the business's income taxes on their individual tax returns. LLCs in this situation do not need EIN numbers unless they are required to file excise taxes or have employees. Instead, you'll simply use your own tax ID number or Social Security number. In most cases, an LLC owned by a married couple will still be considered a sole proprietorship by the IRS. 

How to Get a Tax ID Number as a Single-Member LLC 

An LLC must file IRS Form SS-4 to be issued an EIN. This can be done either over the phone or online, and you'll receive the EIN right away.

Form W-9 Concerns for Single-Member LLCs

If you own an LLC and work as an independent contractor, clients may ask you to fill out a Form W-9 to gather your tax information. This allows them to prepare Form 1099-MISC, which you'll file with your income taxes to report your earnings from that company. When filling out a W-9, IRS guidelines require you to use your Social Security number or individual tax ID, not the LLC's EIN number if you have one. 

Reporting Employment Taxes and Excise Taxes for Single-Member LLCs

A single-member LLC that has employees must file employment taxes using an EIN number. These taxes must be paid by the business, not by the business owner. Employment taxes include:

  • Federal income tax withholdings
  • Medicare and Social Security taxes (FICA) both payable and withheld
  • Federal unemployment taxes

Excise taxes must also be paid using a business's EIN. This category includes business related to non-profit organizations, estates, plan administration, farm cooperatives, certain trusts, and real estate investments.

Corporate Tax Treatment

Corporations are owned by multiple individuals who own stock in the company that they purchased with either money or property. Corporations are taxed separately from their owners and must have IRS EIN numbers for tracking purposes. If you have an LLC and have elected treatment as an S or C corporation for taxation, you will need an EIN number even if you are the sole owner. 

If you need help with setting up your single-member LLC or filing taxes for your business, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.