You will also need to get an employer ID number (EIN) for your new business, even if you don't have any employees. In some states, fax number database you may need an EIN before you file your organization papers. You can apply online for the EIN, which is used for federal income tax and employment tax purposes.1 Most single-member LLCs calculate their business fax number database income taxes on Schedule C of their personal tax returns, In this case, you must use your personal tax ID (not the EIN) when completing a W-9 form when you work as an independent contractor.2 Advantages of Single-Member LLCs While both the single-member LLC and the sole proprietorship are solo business entities, there fax number database are some advantages to the former:
The SMLLC is now a separate business fax number database entity from its owner. It is no longer attached to and identified with the owner, and the owner's liability is limited to their investment in the business. The SMLLC is recognized as a legitimate business, separate from the owner, with the required "LLC" included in the business name. The SMLLC is formed within a state and part of the approval fax number database process is a registration of the business name, so no other business in the state may use that name. A sole proprietor may also register a business name with a state, but it's a separate process.
SMLLCs require more paperwork than if you were fax number database running a sole proprietorship. In addition to the articles of organization, you need to file an annual report and pay a fee with the secretary of state's office.How a Single-Member LLC Is Taxed An LLC is not a specific tax entity for federal income tax purposes, and most single-member LLCs pay income taxes in the same way as sole proprietors, by filing Schedule C as part of their personal income tax returns. The business fax number database Schedule C net income (profit or loss) is then combined with other sources on the owner's personal tax return.