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Two Separate LLCs, Same Owner & Same EIN

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Question: 
I have a business client that has an LLC account who wants to open a differently named LLC account with the same EIN. The client was told that since this is a one member LLC that this could be done. If so, how do we title the account?
Answer: 

It is possible for two or more single-member LLCs that have the same single member to use that individual's SSN as their tax identification number. However, our understanding is that one LLC cannot use the employer identification number (EIN) issued to another LLC. A single-member LLC will need to have its own EIN if it pays employees. Otherwise, it uses its member's SSN for tax reporting purposes. If one of the LLCs has employees and its own EIN, use it in your CIP and for any tax reporting. If the other LLC does not have its own EIN, you should use the member's SSN which is the accepted TIN for that LLC.

Update from John Burnett:Since this answer was published, I learned of an IRS document that sheds some more light on this question. I need to retract the part of the answer above that reads, "However, our understanding is that one LLC cannot use the employer identification number (EIN) issued to another LLC."

One LLC can be the sole member of another LLC. Let's assume that ABC LLC is the sole member of XYZ LLC. If ABC LLC has a sole member, it can elect to be treated as a "disregarded entity" under the IR Code, and use the sole member's SSN as its Taxpayer ID number (TIN). Because XYZ LLC has a sole member (ABC LLC), it also can elect to be treated as a corporation (needing its own EIN) or as a disregarded entity (using its sole member's TIN, which happens to be the SSN of ABC LLC's sole owner).

Each of the sole member LLC's can elect to be treated either as a corporation (requiring its own EIN) or as a disregarded entity (using its sole member's TIN). If ABC elects to be treated as a corporation (requiring that it use an EIN) and XYZ elects to be treated as a disregarded entity, XYZ gets treated (by the IRS) as a division of ABC, and uses ABC's EIN.

First published on BankersOnline.com 6/04/07 and updated 11/07/07

First published on 06/04/2007

Last updated on 11/07/2007

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