What tax classification should an LLC select?

What tax classification should an LLC select?

LLC’s fall into 4 general categories for W-9 purposes.

  1. Single member LLC – In this case the LLC is considered a disregarded entity and one should look to the owner’s name and TIN number to provide on the W-9, not the LLCs. (Provided the owner is not another disregarded entity [typically a single owner LLC] which in that case you would look to the next owner up the line that is not a disregarded entity.)
  2. Multi member LLC –  Pursuant to the entity classification rules, a domestic entity that has more than one member will default to a partnership. Thus, an LLC with multiple owners can either accept its default classification as a partnership, or file Form 8832 to elect to be classified as an association taxable as a corporation.  If they elect to be treated as a partnership they would file Form 1065, U.S. Return of Partnership Income.  For W-9 purposes they would use the LLC’s name on Line 1, check the “limited liability company” box on Line 3 and write in “P” for P=partnership on the line.  The LLC’s TIN number would then be used in Part I.
  3. LLC that has elected S-Corp Tax Status – If the LLC has filed Form 8832 to elect to be taxed as a corporation, followed by From 2553 electing Subchapter S status, they would put the name of the LLC on Line 1, check the “limited liability company” box on Line 3 and write in “S” for S corporation on the line.  The LLC’s TIN number would then be used in Part I.
  4. LLC that has elected C-Corp Tax Status – If the LLC has filed Form 8832 to elect to be taxed as a corporation only, they would put the name of the LLC on Line 1, check the “limited liability company” box on Line 3 and write in “C” for C corporation on the line.  The LLC’s TIN number would then be used in Part I.

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