Do I need another EIN if I already have one for a Chicago, IL sole member LLC and I'm the sole member and I just created another LLC in CA? Or can I use the same EIN for both the IL and CA LLC's?
Tax Professional Answers
Your EIN is belongs to the specific company registered in the State of Illinois. It is like your individual social security number and only follows the company, not you. The Chicago LLC can register in the State of California as a foreign company with the Secretary of State and should do so if you are doing ANY business in California with that LLC. It must file a California return if it does business in this state and pay a minimum of $800 whether it makes a profit or not. If you are the only member and you are the only worker in the company then you must file as a foreign LLC if you do business by that company name and EIN. My suggestion would be to close the State of Illinois LLC as the State of California is not a very forgiving state if you make a mistake and there is no statute of limitations for the Franchise Tax Board in California. You will owe the $800 forever including penalties and interest.
The right to do business in the State of California is costly as even if you don't make a profit, you must pay an $800 annual tax fee. Your California LLC will owe the fee from the date it starts until the date your close the business which requires specific steps for the Secretary of State to declare the LLC closed. If you do not follow the exact steps to close the company, the annual franchise tax fee is still due and continues to accrue interest and penalties.
There are only specific reasons that I would suggest a client to create a single member LLC because you can report business income on a Schedule C on your personal tax return for a much cheaper price and get more write-offs than the LLC. An LLC is a pass through entity. You will receive a K-1 and it ends up on your personal tax return anyway under Schedule E with no further expenses allowed. I find that LLC's are very limited with deductions and prefer using a Schedule C for my clients. Also, if you are not very business savvy and you are just doing the LLC by paying a company or an attorney without any formal instruction, you can wind up in trouble in the end. An LLC will not protect you if you are not following all the rules of that form of business, an attorney in a court of law can "pierce the corporate veil" and leave you liable for everything. There are other ways to protect your business interests without an LLC. With an LLC you just end up paying the annual fees to the State and end up filing extra tax returns for additional costs.
If you have further questions you can call, text or email me. I hope this helps and you can also download a copy of the California Forms and Instructions 568, Limited Liability Company Booklet for more information about what you need to file for California Franchise Tax Board. Click Here: CA Form and Instructions 568 to get a copy for 2016. The California Secretary of State website is here: CA Secretary of State
Caran Ebert, CPA
Tax Questions By Topic:
Meet Leading Tax Advisors
Lakeland, Florida, USA
New York, New York, USA
Federal Tax Credits & Incentives Practice Leader
Denver, Colorado, USA
Fullerton, California, USA
Topanga, California, USA
Rancho Santa Fe, California, USA
CEO/Certified Financial Advisor
Tyrone , Pennsylvania, USA
Greenville, South Carolina, USA
Longview, Washington, USA
Tax Consultant/Tax Advisor
Santa Clara, California, USA
Tax Principal - President
Stellenbosch, South Africa
Exchange Control & Master Tax Practitioner (SA)
Boston, Massachusetts, USA
Tax Partner, International Tax
Senior Tax Manager
Toronto Mississauga Oakville Burlington Hamilton, Canada
West Palm Beach, Florida, USA