how should an llc fill out a w9 [Fact-Checked]

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Last updated : Sept 13, 2022
Written by : Malissa Obray
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how should an llc fill out a w9

Comment by Madonna Hogarth

so in this video i want to walk you through the correct way to complete an irs form w-9 for a single member llc there's a lot of confusion around this um i see it done incorrectly all the time and the irs is starting to really crack down on it because um the reporting is all over the place and so they want um taxpayers to complete this you know prefer the instructions in the form so in this example we're going to go through how to complete a w-9 for a single member llc that's a disregarded entity right so in here we have john q taxpayer he's the individual taxpayer and he runs a sole proprietorship business through a single member llc he's got here john q taxpayer llc right and so this example is one where john has not filed any elections for the llc right so the default classification for an llc with one member is a single member llc and it's disregarding any for federal tax purposes so if he was completing a w-9 for his entity because let's say someone as someone requested it from him before they remitted payment to him he would enter his name on the top line one there john q taxpayer that's the name of the individual and then his business name right so they have lined to their business name disregard entity name if different from above that's the case here he's operating his business through his llc and then in box three we check the appropriate federal tax classification right and as i said this is an llc that he knows 100 of he hasn't made any elections so by default it's a disregarded entity so he clicks uh this box here single member llc now if he had made any kind of elections right so an llc can file an election to be taxed as a c corp if he if he filed that election he can he can check this box limited liability company and then enter classification c or if john um as a u.s taxpayer or as a u.s tax resident rather he's he's eligible to make an escort election right so he could have made an escort election by filing a form 25-53 um and so if that was the case he could check this box again and enter s right um the partnership classification is of course if it's an llc with more than one owner right so if john q taxpayer llc wasn't owned solely by john but uh if there was another investor in there or another business partner he had um it's a default partnership and he could enter p down here um okay so and then the rest of this is relatively straightforward right the address of the business account numbers um again optional right depends on who you're providing this uh w-92 um you know if you're providing it to a payor that you know would want to see your account number down there just for completeness you can enter it but not necessary and so part one this is also done wrong all the time if you have a single member llc you're supposed to use the taxpayer id for the sole owner right so in this case john q taxpayer as the individual owner of the disregard entity should use his social security number even if the entity has an ein right so john q taxpayer llc probably has an ein single member llcs that are disregarded can still apply for them and they often need it for banking purposes a bank will require an ein um even though it's a single member llc that's disregarded but when you complete the w-9 you've got to use the social or ein of the sole owner okay so if this was a single member llc um and let's say the owner was a corporation right so um you know let's say florida corporation inc owns 100 a john q taxpayer llc you would use the ein of florida corporation inc right the number one spot there do not use the ein of the llc here right because it's disregarded so i see that done wrong all the time they put down the ein of the discord identity now if this entity um if this single member llc filed an election to be a c or s corp then you can use the ein of the llc because now it's a regarded entity but so long as this entity here number two is a disregard entity cannot use the cin okay you've got to use the social or the ein of the ultimate the beneficial loan or the taxpayer here on line one okay it's very important to do that right um and then of course the certification down here sign um you know it's a responsible party down here sign a date and then provide that to the withholding agent you're done okay so thank you for uh watching the video and if you have any questions please leave a comment below and as always please definitely appreciate it if you could like the video subscribe to the channel thanks so much for for watching and i look forward to seeing you again soon thank you

Thanks for your comment Madonna Hogarth, have a nice day.
- Malissa Obray, Staff Member

Comment by manistep

how should a single-member LLC fill out a w-9 in this video I'll simplify the difference between the LLC and how its treated for tax purposes so that you always know when to use your social security number or your EIN number as well as understanding the S corp election and to help you understand all of the differences between the LLC as a business entity and taxes a man to hear from the business finance coach where I'm simplifying the technicalities of business if you want to grow your business and you're new to my channel consider subscribing by clicking the watermark in your bottom right corner of this video I look forward to seeing you around the channel and learning more about your business and your questions ok so here we are at the w9 form you can see the IRS link up here to get to this form just google search IRS W - 9 ok so this is a request for taxpayer identification number and certification what this means is if someone has hired you to do a project for them hired your business they will give you this form to complete this form takes the place of form w-4 which may sound familiar from when you were an employee and you got a job you would complete your w-4 so if you hire someone to work for you and you're gonna pay them over $600 and they're not a large corporation like Home Depot or Walmart then you also want to give them this form as a way to request for their information for taxes including their tax number when you fill out this form you have to take a look at your business if you are an LLC that LLC is a legal type of business for taxes you may be aware that your LLC is a disregarded entity what that really means is that the IRS has not created a tax form for the LLC the LLC was created more recently to help small business owners be able to have limited liability protection and essentially start businesses easier without all of the requirements that go with a corporation so the LLC is a benefit to you because it's easier it's formed at your state level and it's a legal business for taxes it doesn't exist okay so instead how you are taxed is based on how many members are in your LLC one member to your LLC you default to be taxed as self-employed two or more members in your LLC you default to be taxed as a partnership the third option both of these situations one member or two or more can choose to elect S Corp status S Corp is a special way to be taxed for small businesses and be sure to check out my series on being tax as an S corp if you default to be taxed as self-employed your business for taxes is not separate from you legally it is now so when it comes to filling out a form like this the w9 form so your name as a single-member LLC as shown on your income tax return name is required this must be your personal name as a single-member LLC that defaults to be self-employed you need to put your name here however just like it says online to business name disregarded entity name if different you put your LLC name here when it comes to box 3 you can only choose one of these so as a single member LLC that defaults to be self-employed you obviously choose this first option individual sole proprietor or single-member LLC once you do that you do have to use the social security number down here in your taxpayer identification number and not an EIN and I'll explain why if you have an EIN you can use that for if you have employees you're required to use it if you have employees if you read the instructions for this section it says if you have a disregarded entity go to the next level that is regarded for tax purposes and put that identification number so for a single-member LLC defaults as self-employed reported on your personal return on a Schedule C attached to your personal return the next number the next recognized taxpayer is you as an individual and you'll put your social security number now to make sure that the that your income ends up under your LLC for legal purposes make sure to mention to the business paying you that you want to be paid under your business name and they should do that for you because you've included that here if you are a multi-member LLC what would the name of the tax return what would the name of of the taxpayer be the name of the taxpayer would be the partnership return that you file with the IRS which will be the LLC name for a multi-member partnership the disregarded entity name is probably the same as that LLC partnership name so you would leave this blank then down here you would just check partnership and for the number it would be the partnership iin number because there is no other number for an actual business entity for federal other than the ein now if you form the S Corp now what is the first return after your disregarded LLC that's being filed it's no longer your purse returned its your escort per term the first recognized IRS entity is the S Corp which will have your LLC business name on it even if it's a single-member LLC so in that case you'll put the LLC name here on line 1 that would be the same for line 2 so you'd leave that blank and coming down to box 3 you will check this limited liability company and enter the tax classification here which is s for S corp then when you come down to the taxpayer identification number you again are going to use the ein because to file an S Corp return you cannot use a social security number you must use that separate entity number II I n number on the 1120 s s corporate term now you can scroll down here to see other directions you can see this information that I just summarized here and down here for the disregarded entity as far as why a single-member LLC has to put their social security number now one other thing I wanted to mention is when it comes to form 1099 miscellaneous because this is the first form that you'll fill out when you're working for a business and that you'll give to people that you are paying more than six hundred dollars to do work for your business and then at the end of the year the people who you gave this form to will issue your business a 1099 and you will issue people you paid a 1099 miscellaneous so you should be pulling that information from this form on the 1099 s that you issue people you should include whatever number you included on your w9 so if you're a single member LLC and you default to be taxed as self-employed you need to put your social security number on the 1099 s that you issue to people you paid if you are a multi-member LLC or any amount of members but you elect S corp status then you will use a federally I number so if you got the EIN number and you're single member LLC self-employed for taxes what did you get the number for well you didn't actually need the number unless you pay employees that's the only time you need that number and you know in even in one of my videos in the past few years I had made a mistake and I had said that you could use your EIN number your federal ein number to keep your social security number private as a single member LLC and it was a lawyer who told me that which is interesting because it's a tax rule but lawyers in a way sell this S corp election as well as the ein

Thanks manistep your participation is very much appreciated
- Malissa Obray

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