Author Topic: Single Member LLC Tax ID  (Read 10567 times)

waynem

  • Newbie
  • *
  • Posts: 2
Single Member LLC Tax ID
« on: May 03, 2010, 10:53:26 AM »
We just learned that for IRS 1099 purposes, we should have been using the LLC's sole owner SSN when sending W-9's.

We have been using the LLC EIN for NPI and Medicare purposes for several years.

What steps do we need to take to get this corrected with minimal disruption?

medauthor

  • Full Member
  • ***
  • Posts: 130
    • Professional Medical Billers Association
Re: Single Member LLC Tax ID
« Reply #1 on: May 03, 2010, 04:04:53 PM »
Why is this?  My new provider sent W9s' with the LLC's tax id #, not the sole member's soc sec #  ???
Michelle Rimmer, CHI, CPMB
President-Professional Medical Billers Association
Owner-ABA Therapy Billing Services
Author, 'Medical Billing 101' and 'Coding Basics: Understanding Medical Collections

PMRNC

  • Hero Member
  • *****
  • Posts: 4252
    • One Stop Resources & Networking for Medical Billers
Re: Single Member LLC Tax ID
« Reply #2 on: May 04, 2010, 06:24:47 AM »
Yeah I agree with Michelle, You would use the EIN, only reason you would use the SS of the sole owner is if they did something for you as an independent contractor outside of the group.
Linda Walker
Practice Managers Resource & Networking Community
One Stop Resources, Education and Networking for Medical Billers
www.billerswebsite.com

Michele

  • Global Moderator
  • Hero Member
  • *****
  • Posts: 4761
    • Solutions Medical Billing
Re: Single Member LLC Tax ID
« Reply #3 on: May 04, 2010, 07:20:20 AM »
and I agree with Linda and Michelle.  If they have an LLC and an EIN, why would they want to do the W9 under the SS#?  If they want Medicare to pay under the LLC then they cannot enroll with the ss#.  But in case there is a reason to what you are saying, you would complete a CMS 855I, CMS 588 EFT and a CMS 460.

Michele
Sign Up for our FREE Medical Billing Newsletter
Get a 10% discount on Medical Billing Products by using Coupon Code: 10OFF
http://www.solutions-medical-billing.com

waynem

  • Newbie
  • *
  • Posts: 2
Re: Single Member LLC Tax ID
« Reply #4 on: May 04, 2010, 08:04:05 AM »
Page 2 of the W-9 "Specific Instructions - Name - LLC" says that for a Single Member LLC you need to enter the owner's name in NAME box and the LLC in the Business name

Page 3, "Part 1. TIN" - 3rd paragraph, states the OWNER's SSN/EIN needs to be entered if it is treated as a "disregarded entity" for tax purposes. There is a chart on page 4 (#5)

This was not know by us until recently.

tinapiro

  • Newbie
  • *
  • Posts: 4
Re: Single Member LLC Tax ID
« Reply #5 on: June 10, 2010, 06:07:43 PM »
I know this is a month old, but I thought maybe I could clarify this a little bit.  My background is accounting so I thought I might be able to shed the light on this a little more.  When filling out a W-9 for a corporation, partnership, or sole proprietorship it's very basic - you have an EIN for a corporation or partnership and you use a SSN for a sole proprietorship.  When an LLC is formed, you still have the option to form under any of these categories.  If they form under a corporation or partnership, you use an EIN.  If the LLC is formed under an individual (sole proprietorship), it's considered a disregarded entity and the individual should use their SSN.  The issue with the LLC and the W-9 is that you may not always know if they are a sole proprietorship or not.  They may not have their individual name listed in the name box, and they don't always mark the tax classification (C, P, or D).  I always make sure they have the tax classification box marked - it's the only way you know for sure whether the company is formed under an individual.

I hope that helped a little bit.   

PMRNC

  • Hero Member
  • *****
  • Posts: 4252
    • One Stop Resources & Networking for Medical Billers
Re: Single Member LLC Tax ID
« Reply #6 on: June 10, 2010, 09:04:15 PM »
Quote
If the LLC is formed under an individual (sole proprietorship), it's considered a disregarded entity and the individual should use their SSN. 

I've been an LLC (sole proprietor) and I've always used my EIN ???
Linda Walker
Practice Managers Resource & Networking Community
One Stop Resources, Education and Networking for Medical Billers
www.billerswebsite.com

dekenn

  • Jr. Member
  • **
  • Posts: 77
Re: Single Member LLC Tax ID
« Reply #7 on: June 11, 2010, 11:45:13 AM »
When we set up my husband's practice, (sole proprietor), we did NOT form an LLC, but were told by our accountant that we needed an EIN for the business so we could pay the employees, and get paid by the insurance companies. We always have filled out the EIN on the W-9's.  Because of past business with Medicare, he was already enrolled in Medicare under his SSN.... which, is now causing complications with the electronic billing and crossovers.  When I called Medicare, they told me to fill out the enrollment forms 855I with his EIN number!! ??  I don't think anybody really knows what the correct way is, as long as it's consistent I guess... (reporting income and paying taxes!!!)   ??? ??? ???

tinapiro

  • Newbie
  • *
  • Posts: 4
Re: Single Member LLC Tax ID
« Reply #8 on: June 11, 2010, 12:22:56 PM »
Since LLC's are created through state laws (and not federal laws), they aren't recognized by the federal government as a separate tax classification.  The federal government only recognizes whether a company is a corporation, partnership or sole proprietorship.  A single member LLC who is being treated as a disregarded entity (did not fill out the 8832 to be treated as a corporation) and who does not or will not have employees, should report under the single owner's name and SSN.  If (or when) a single member LLC hires employees, they must use the LLC's EIN - you can't report payroll taxes under an individual's SSN.  

As far as your husband's practice, if he has employees he should be reporting everything under the business EIN.

Linda - do you have employees?  If so, your good to go because you should be using your EIN.

dekenn

  • Jr. Member
  • **
  • Posts: 77
Re: Single Member LLC Tax ID
« Reply #9 on: June 11, 2010, 02:12:42 PM »
That makes sense..... now the daunting task of getting Medicare switched over to his EIN... should be interesting. Unfortunately, I know the deadline for PECOS is next year, so I keep putting it off..   ::)

PMRNC

  • Hero Member
  • *****
  • Posts: 4252
    • One Stop Resources & Networking for Medical Billers
Re: Single Member LLC Tax ID
« Reply #10 on: June 11, 2010, 08:17:46 PM »
No, no employee's, but I've been setup this way for 7 years.
Linda Walker
Practice Managers Resource & Networking Community
One Stop Resources, Education and Networking for Medical Billers
www.billerswebsite.com

medauthor

  • Full Member
  • ***
  • Posts: 130
    • Professional Medical Billers Association
Re: Single Member LLC Tax ID
« Reply #11 on: June 12, 2010, 10:22:35 PM »
I have to agree with Linda here....I, too, am a single member LLC and used my EIN.
Michelle Rimmer, CHI, CPMB
President-Professional Medical Billers Association
Owner-ABA Therapy Billing Services
Author, 'Medical Billing 101' and 'Coding Basics: Understanding Medical Collections

Pay_My_Claims

  • Guest
Re: Single Member LLC Tax ID
« Reply #12 on: June 13, 2010, 01:21:19 PM »
it think its new, because when I applied online, I got the same message as a disregarded entity. a single provider LLC

PMRNC

  • Hero Member
  • *****
  • Posts: 4252
    • One Stop Resources & Networking for Medical Billers
Re: Single Member LLC Tax ID
« Reply #13 on: June 15, 2010, 10:42:33 AM »
Ok, I happened to ask my accountant yesterday and he said it's correct that the LLC laws vary from state to state.. There are states that have a requirement on how many can form an LLC. The use of the EIN is your choice as long as it's followed through.. I could have used my SS # being that I had no employees but I had already had an EIN so that is what I used and it's perfectly acceptable and legal. Now in the states where you can't have single member (sole proprietorship) LLC's then I imagine it's different. Oh and also he says it goes by the state in which you create the LLC.. You don't have to setup in the state you are in. For example many companies setup up different corp statuses in Delaware  ;D ;D
Linda Walker
Practice Managers Resource & Networking Community
One Stop Resources, Education and Networking for Medical Billers
www.billerswebsite.com

evans1035

  • Newbie
  • *
  • Posts: 7
Re: Single Member LLC Tax ID
« Reply #14 on: October 01, 2010, 05:52:20 PM »
Ok, I think this might be part of the same problem my provider is having with Medicare, and I also don't know what to do about her other carriers.
 Medicare sent something to a 15 year old address (which I thought was changed since current address had been filled out on NPI, NPPES websites), it came back and they sent out a letter to her saying she had to revalidate. Letter dated 4/1/10, she actually got 5/15/10, saying she had 60 days to do what the letter said. So, we filled out the 855I with address correction (after I went through app section by section with a prov enrollment rep, and then another one to clarify more a few days later - of course they said different things - first rep said for the address situation mark "change" by practice location; second rep, said we needed to delete the 15 yr old address, then do a separate page to "add" the so-called new address).

Then we get a letter 8/2/10 saying based on info received, she NOW MUST HAVE an organizational NPI. Apparently, all this time her Medicare PTAN and NPI were individual and linked to her SS#, not her Tax ID, even though that's what I've always put on claims. She is a Professional Corp., but it's just her. That was already in place when I took over billing, so I had no reason to question anything. Ok, so we do everything in the letter and 8/25 we get another letter that they have de-activated her old # back to 3/5/10, even though the original letter was dated 4/1 and said she had 60 days to revalidate, and she was issued a new group PTAN and we had gotten a new grp NPI.OK, I THINK I MIGHT HAVE TO CONTINUE ON ANOTHER MESSAGE SINCE THIS SEEMS TOO LONG.