Is EIN required for LLC?

[graciez]

Thank you, that makes a lot of sense!

[Straightup]

I just went through all this, as I just set up my LLC in WI.  My tax guy said get an EIN.  When I looked at the application, you cannot put in an LLC as an entity (must be sole proprietorship, partnership, or cooperation).  When I talked to my lawyer, he said I do not need an EIN and that when I set up my accounts at the bank that they could call my lawyer if they had any questions.  The manager of my bank consulted with the manager of business operations for the whole state and he agreed with my lawyer.  I talked to this business operations manager and he said that after 2 -3 years my company would have credit regardless of what no. it was under and I could get business loan then.  So that's the route I took.

As to multiple LLC's, my lawyer said that he has a client that has about 25 rentals and has 4 LLC's.  This came in handy as he got sued from a tennant for quite a large amount.  

[Tim777]

I just went through all this, as I just set up my LLC in WI.  My tax guy said get an EIN.  When I looked at the application, you cannot put in an LLC as an entity (must be sole proprietorship, partnership, or cooperation).

I believe you need to call them and file the application over the phone. It takes about 10min to get EIN. What's gonna take time is to change all this info in banks, etc.. wherever you've used you SSN. So it's s good ide to get EIN right from the start. It will save time in the future when you realy need EIN.

[DFWHoldings]

Boy, this site is a godsend!!!  I learned that , yes, I need an ein for the newly formed LLC just recently set up with my 2 brothers (we're all member).  We'll be purchasing property under the LLC.

But someone here mentioned that we should set up an LLC for each piece of property we purchase??  

Why??  Please explain.

Thanks,
mike

The only advantage to having multiple LLC's is that the 'pool' of assets under each LLC is smaller thus if something happened that required your LLC to pay damages the assets for that LLC would include all of your properties if you only have one LLC versus only the one property if you had a different LLC for each one.

Personally, I think having a different LLC for each property adds an enormous amount of paperwork that provides a minimal amount of benefit. But that's only my opinion.

[Dave T]

I just went through all this, as I just set up my LLC in WI.  My tax guy said get an EIN.  When I looked at the application, you cannot put in an LLC as an entity (must be sole proprietorship, partnership, or cooperation).

You are misinterpreting the form.  You must state whether your LLC will be treated for tax purposes as a sole proprietor, as a partnership, or as a corporation.  If you elect corporation, the default is C-Corp.

When I talked to my lawyer, he said I do not need an EIN and that when I set up my accounts at the bank that they could call my lawyer if they had any questions.  The manager of my bank consulted with the manager of business operations for the whole state and he agreed with my lawyer.  I talked to this business operations manager and he said that after 2 -3 years my company would have credit regardless of what no. it was under and I could get business loan then.  So that's the route I took.

At least you found bank employees who were willing to put in some time to research the question and confirm what we have been saying all along.  

I see a potential pitfall with using your SSN for your business credit.  Your personal credit report will be affected by all your business activity.  A business failure could trash your personal credit score.  I fthis could be an issue for you, then I suspect that you would want a separate tax id number for your business to segregate your business credit from your personal credit.  

As to multiple LLC's, my lawyer said that he has a client that has about 25 rentals and has 4 LLC's.  This came in handy as he got sued from a tennant for quite a large amount.

When you have a lot of eggs, you want to limit the number of eggs that can get broken if a basket gets dropped.  Spreading your eggs among several baskets limits your risk of loss.

In other posts on this site, and in posts on other websites, John Hyre has always suggested that you limit the equity in your LLC to $250K.  When you reach that limit, John suggests that you establish a new LLC for your next acquisitions.  

[Straightup]

Good points Dave and all.  I will go over this info with my lawyer at our next meeting.  The comment about the business and the risks involved affecting my credit report is something that I should have considered.

Jeff