Sole Member LLC - Account Titling

The answer depends on how your system identifies the name to be sent to the IRS in the event that year-end reporting becomes necessary, and whether the sole member LLC has elected to be disregarded as an entity, that is, to use its member's SSN as its TIN. If your system needs to have a name/number match to the first line of the name/address record, as a lot of older systems do, and if the number you are using as the TIN of the LLC is the member's SSN, you need to have the sole member on that first line, designated as the sole member. If the LLC has elected not to be disregarded and has given you its EIN, you can title the account in the name of the LLC. If your system can look to a field for tax reporting that is separate from the names in the account title, you can title the account with the LLC's name and make sure that separate IRS name field agrees with the TIN you've assigned to the account.

If you do end up using the sole member's name and SSN, the addition of "sole member" or an abbreviation for same in the account title should serve as an alert that in spite of the way in which the account is titled, and in spite of the fact that it carries the member's SSN, the account is owned by an entity legally separate from the individual member. For example, if you received an IRS levy for the individual, you should not include the LLC's account in your response, even though the individual's name appears in the title and his/her SSN as the TIN.

First published on BankersOnline.com 11/09/09