Single-Owner LLCs With Employees Must Obtain a Federal EIN

Keep in mind that the sole LLC owner is not an employee of the LLC. Sole owners pay and report their share of profits on IRS Form 1040, Schedule C.

Starting in 2009, single-owner LLCs with employees must obtain a Federal Employer Identification Number (FEIN) for their LLC, and must use this number to withhold and report employment taxes for the LLCs employees. Previously, sole LLC owners could use their individual taxpayer IDs (for example, their Social Security Number) to report and withhold employment taxes.

Keep in mind that the sole LLC owner is not an employee of the LLC. Sole owners pay and report their share of profits on IRS Form 1040, Schedule C. They also figure and report self-employment tax on these earnings on IRS Form 1040, Schedule SE.

For more information, see the IRS website at www.irs.gov, and check with your tax advisor to confirm how these rules apply to you and your LLC.