Know Your TINs and 1099s for Taxes

Confused about TINs and EINs? Here’s info to help you decide which to use in your business.

Dear Janet,

I’m starting a home business and want to keep the business finances separate from my personal finances. Would it be better to apply for a TIN or EIN? Currently I have no plans to hire any employees.

— High Hopes

Dear Hopes,

TIN is an acronym for Taxpayer Identification Number. This can be either your Social Security number (SSN) or an Employer Identification Number (EIN). If you’re going to operate as a sole proprietor and won’t have employees, you can use your Social Security number as your TIN. You can use the Social Security number (along with a DBA certificate) to open a bank account in the business name (see our DBA definition page for more); however, many banks require an EIN for opening a business bank account. If you later decide to hire employees, then you would apply to the IRS for an EIN.

Dear Janet,

We deal with several LLCs and are confused about what to do with 1099s for the LLCs. We have issued some checks during the year to the LLCs and some to the individuals in the LLCs. How do we handle the 1099s? Do we submit 1099s for the LLCs or for the individuals who received compensation?

— Perplexed

Dear Perplexed,

Here’s how the IRS says to handle 1099s for LLCs:

For a single-member limited liability company (LLC) (including a foreign LLC with a U.S. owner) that is disregarded as an entity separate from its owner under Regulations section 301.7701-3, enter the individual’s name only on the first name line and the LLC’s name on the second name line. For the TIN, enter the individual’s SSN (or EIN, if applicable). If the business is a corporation, partnership, etc., enter the entity’s EIN.

Janet Attard is the founder of the award-winning Business Know-How small business web site and information resource. Janet is also the author of The Home Office And Small Business Answer Book and of Business Know-How: An Operational Guide For Home-Based and Micro-Sized Businesses with Limited Budgets.

Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.