Estimated quarterly taxes on Single Member LLC

June 14, 2017 3:59 AM

I started a Single Member LLC this year. It uses my Social. It has its own bank account. Over the past quarter I have had income coming into my personal bank account and the LLC account. Now I need to pay quarterly estimated taxes. Can I submit a 1040ES like before and use money from either account to cover the income having gone to my personal bank account AND the LLC account?
posted by spacefire to Work & Money (4 answers total)

Yes. For most federal income tax purposes, your LLC doesn't exist (unless you elected to have it treated as a corporation rather than the default status of disregarded entity). Many people with a W-2 job and a side business just increase withholding at the W-2 job to cover their entire anticipated tax liability.

To maintain state limited liability protection, however, it's often best practice to not commingle business and personal funds - but that's a state law issue not a fed tax issue and you'd need to consult with an attorney for advice on your particular circumstances and your particular state's laws.
posted by melissasaurus at 7:12 AM on June 14, 2017 [1 favorite]

Seconding melissasaurus' suggestion of not commingling funds. The whole point of the LLC concept is to create a business entity separate from your personal financial identity. When business owners blur the line between personal and business assets, they open their personal assets to seizure in the event of a business dispute.

Look into not only getting a separate business checking account, but also an EIN for tax purposes.
posted by Martys_Friend at 4:40 PM on June 14, 2017

Response by poster: I might get an EIN before the end of the year if I need to hire people, but what do I do till then? My state law for the entity is the same as federal.
posted by spacefire at 6:33 AM on June 21, 2017

Per the IRS:

For federal income tax purposes, a single-member LLC classified as a disregarded entity generally must use the owner's social security number (SSN) or EIN for all information returns and reporting related to income tax. For example, if a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, Request for Taxpayer Identification Number and Certification, the W-9 should provide the owner’s SSN or EIN, not the LLC’s EIN.

However, for certain Employment Tax and Excise Tax requirements discussed below, the EIN of the LLC must be used instead. Therefore, an LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below. [...]

A single-member LLC that is a disregarded entity that does not have employees and does not have an excise tax liability does not need an EIN. It should use the name and TIN of the single member owner for federal tax purposes. However, if a single-member LLC, whose taxable income and loss will be reported by the single member owner, nevertheless needs an EIN to open a bank account or if state tax law requires the single-member LLC to have a federal EIN, then the LLC can apply for and obtain an EIN.

Note: applying for an EIN is free, you can do it online, and it takes less than 10 minutes.

RE state law - you should consult an attorney in your jurisdiction. State income tax law =/= state sales tax law =/= state limited liability law =/= state licensing laws =/= local tax laws, etc. Each body of law might treat your LLC differently.
posted by melissasaurus at 7:02 AM on June 21, 2017