SMLCC: effect of notice 99-6 being obsolete?

Posted by Steve Pope on October 2, 2009, 6:31 pm

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>Steve Pope wrote:

>> It's also not totally clear to me you can form an LLC (at least

>> in California) without obtainin an EIN. If the CA-SMLLC just

>> uses the individual's SSN, this clouds the distinction between

>> assets of the LLC and personal assets that are shielded from

>> liability. It would seem to me problematical to do it this way.

>I agree that there are other reasons why an SP without employees

>might require an EIN.

>I don't agree that CA requires an EIN for an SMLLC operating as

>an SP. Last time I looked, CA conformed to the federal rules on

>EINs. An SMLLC acting as a sole proprietor would only require an

>EIN using the rules already discussed (employees, qualified plan,

>etc.). These are the federal rules found at:

>http://www.irs.gov/businesses/small/article/0,,id=97872,00.html

>I checked "Starting A Business In California" by Talamo & Warda

>and they also say that an EIN is not necessarily required by an

>SMLLC.

Thanks for the information, this is interesting.

I am still not comfortable with it. For one thing, an individual
can run more than one small business using their SSN. But if
one of them is an LLC, how does one determine which assets are
shielded? The individual can assert "this account receivable
is not for the LLC you have a judgment against, therefore you can't
attach it", but it sure would be cleaner if it's under a
different taxpayer ID.

But maybe these are edge cases.

Steve

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Posted by Wallace on October 2, 2009, 8:18 pm

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>>Steve Pope wrote:

>>> It's also not totally clear to me you can form an LLC (at least

>>> in California) without obtainin an EIN. If the CA-SMLLC just

>>> uses the individual's SSN, this clouds the distinction between

>>> assets of the LLC and personal assets that are shielded from

>>> liability. It would seem to me problematical to do it this way.

>>I agree that there are other reasons why an SP without employees

>>might require an EIN.

>>I don't agree that CA requires an EIN for an SMLLC operating as

>>an SP. Last time I looked, CA conformed to the federal rules on

>>EINs. An SMLLC acting as a sole proprietor would only require an

>>EIN using the rules already discussed (employees, qualified plan,

>>etc.). These are the federal rules found at:

>>http://www.irs.gov/businesses/small/article/0,,id=97872,00.html

>>I checked "Starting A Business In California" by Talamo & Warda

>>and they also say that an EIN is not necessarily required by an

>>SMLLC.

> Thanks for the information, this is interesting.

> I am still not comfortable with it. For one thing, an individual

> can run more than one small business using their SSN. But if

> one of them is an LLC, how does one determine which assets are

> shielded? The individual can assert "this account receivable

> is not for the LLC you have a judgment against, therefore you can't

> attach it", but it sure would be cleaner if it's under a

> different taxpayer ID.

> But maybe these are edge cases.

> Steve

I think the way to differentiate is to have the LLC assets clearly titled in
the LLC name. Real Property, Personal Property, bank accounts, etc. This
is the case for LLCs, corporations (C and S), and regardless of any
consideration of TINs.

And why do you think this is an issue with CA SMLLCs and not those of other
states? Or did I misread your earlier post?

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Steve Pope on October 2, 2009, 8:31 pm

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>I think the way to differentiate is to have the LLC assets clearly titled in

>the LLC name. Real Property, Personal Property, bank accounts, etc. This

>is the case for LLCs, corporations (C and S), and regardless of any

>consideration of TINs.

That makes sense.

>And why do you think this is an issue with CA SMLLCs and not those of other

>states? Or did I misread your earlier post?

I am speaking in complete ignorance of other states, and only
partial ignorance of California rules. :-)

Steve

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>