Employment Identification Numbers (EINs) vs. Social Security Numbers
Multimember LLCs must use an employer identification number (EIN) to file taxes. Sole proprietors and single-member LLCs can use Social Security numbers instead. Many business owners prefer EINs for the tax options and financial advantages offered.
Tax Identification for Single-Member and Multi-Member LLCs
According to the IRS, only single-member LLCs can use Social Security numbers. Can existing accounts be corrected, or must they be closed and reopened with the correct tax identification numbers?
Taxation Rules for LLCs
For federal income tax purposes, single-member LLCs classified as disregarded entities must use the owner’s Social Security number or EIN for all income tax reporting and information returns. Partnership tax rules apply to multi-member LLCs unless they choose corporate taxation.
The multi-member LLC structure provides personal protection against legal problems and debts of the business. Owners enjoy a degree of limited liability, making it an appealing choice for business owners seeking peace of mind.