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CLIENT FORMED LLC

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Level 3

My  client is single and self employed. He filed Schedule C in 2018, but in 2019 formed an LLC with himself as the only Manager.

He received several Forms 1099-MISC from his customers in  the LLC name and EIN for 2019.

I trust he can use the same Schedule C  with the only change being to report the LLC name on Line C and the EIN on Line D.  Is this correct?

Also, he opened a checking account in the name of the LLC with their EIN and the bank gave him a bonus of $300.00 which they reported to him on Form 1099-INT for 2019.

Does this get reprted on Schedule B as interest income even though the EIN is different from his social security numer?

Thanks.

 

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Level 11

When he applied for the EIN, he told IRS his SSN.  IRS then linked the EIN to his SSN, so that if no tax return is filed using the EIN, they will link the 1099 information to the return filed with his SSN.  

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Level 15
Level 15

SMLLCs are disregarded for tax purposes, its all treated the same as a sole proprietor, so it all goes on Sch C and the interest earned goes on Sch B like any other interest he earned.


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Level 3

Therefore it makes no difference that the EIN of the LLC is used on the Form 1099-INT instead of his social security number. Correct?

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Level 15

Some states (like California) have additional filing requirements & tax/fees for SMLLC's.  Be sure you check for whatever state your client is in.

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Level 3

Are you referring to the line on Schedule C that reads:

Check this box if filing as an LLC in CA, NY, TN, or TX?

My client is in Massachusetts (MA).

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Level 15

No... I'm referring to the fact that SOME states require an additional filing (CA requires a Form 568, payment of an $ 800 minimum tax plus possible LLC fees).  

I'll leave it up to YOU to figure out if MA has the same requirement (as I do one MA individual return.)

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Level 15

Check this box if filing as an LLC in CA, NY, TN, or TX?

I don't see this on the actual Sch C that goes with the F 1040 - I suspect you mean your software asks that when inputting info.  Lacerte (which is what I use.. ) does not.

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Level 3

Yes it does.  I use ProSeries Basic.

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Level 11

When he applied for the EIN, he told IRS his SSN.  IRS then linked the EIN to his SSN, so that if no tax return is filed using the EIN, they will link the 1099 information to the return filed with his SSN.  

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Level 2

Does that mean there's NO need to file Form 1065, if it's single member LLC?

 

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Level 3

That is my understanding.

I'm reporting business activity on Schedule C.

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Level 13

@khorshed 

There is No Partnership, if this is one individual. That means the LLC is a disregarded entity. That means you file Sched C as part of the 1040. There is no 1065 for the Single-Member LLC. That's what "disregarded" means = treated the same as Sole Proprietorship for purposes of Federal taxes. Some States have a few different forms and fees. Mostly, the LLC designation is a Legal and State designation and is meaningless to the Feds for the individual tax payer.

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