Does each LLC have different EIN?

Question

If you have an LLC for each property or for different businesses, does each LLC need to have a separate EIN? If so, how would taxes be filed? I understand a single member LLC files a personal tax return and that is it, but how would having several LLCs affect that?

Nathan Gesner · Answer

If you have a single-member LLC, it does not require a separate tax return. If you have seven single-member LLCs, they do not require separate tax returns. The LLC can be filed with your personal return.Are you thinking of creating a separate LLC for each property like some recommend? It's a lot of added cost and complexity.An LLC is useful for two things: anonymity and legal protection. In most cases, neither is warranted. Warning: I am not an attorney and this can be a complicated topic. Please note the information provided below is a layman's definition designed to provide a basic understanding for the general audience. You should consult an attorney or CPA for your specific situation. ANONYMITY: When you create the LLC, your name is recorded on the documents and published on the Secretary of State website for all to see. So you're not completely anonymous. If you want to be completely anonymous, you can use a Registered Agent. The Registered Agent will record the documents on your behalf so only their name and information appears on the documents. I've done this with my properties because I'm well known in my small town and don't want people to know what I own. LEGAL PROTECTION: By placing your assets in an LLC, you are legally separating them from your personal assets. If someone injures themselves and sues, they will be suing the LLC and not you personally. If your insurance coverage isn't enough, they could seize the LLC assets, but not your personal assets. Additional thoughts: 1. An LLC is not free. You can spend as little as $100 to form an LLC, or you could use an attorney and spend $1,000 or more. There are also additional costs of operating and maintaining an LLC, like separate bank accounts, annual report filings, tax filings, etc. 2. There are rules to follow! If you fail to follow the rules, you may open your personal assets to a lawsuit. An example of this would be mixing your personal money and LLC money in the same bank account. 3. You do not need a separate LLC for each property or a series LLC! Don't make your life more complicated than it has to be. Most professionals will recommend a separate LLC for every $1 million in assets but I don't think that's necessary. In my case, I have residential rentals in one LLC, commercial properties in another, self storage in a third, and my real estate company operates in a fourth. Some have more than $1 million in equity while others have less. 4. The need for an LLC is grossly exaggerated on BiggerPockets and other websites. Have you ever heard of a Landlord being sued by a Tenant and losing property? I've been on this board since 2010 and haven't found an example yet. You've probably heard of big Landlords losing property, but only because they were flagrantly violating Fair Housing, running a slum, or otherwise violating the law in an egregious manner. You are more likely to be struck by lightning twice. The vast majority of lawsuits against Landlords are for wrongful eviction, security deposit disputes, and Fair Housing Violations. Your basic insurance policy with $300,000 in liability coverage should be sufficient in 99.999% of all lawsuits. 5. The best protection for you and your investments? Know and obey the law. I manage around 400 rentals with 12 years experience and have never been sued once. Even if I were sued, I document everything and obey the law, so I won't be found guilty. Even if I were found guilty, the cost would be in the thousands, not in the millions. Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is likely to be higher, then you may consider an umbrella insurance policy. This policy will provide additional coverage above what your existing policy covers. It's easy to obtain, costs very little, and doesn't require additional, on-going effort to maintain.

Will Fraser · Answer

BUT BUT BUT let's address a key thing here . . . it seems like you may be getting the cart before the horse.I'd highly recommend finding a savvy CPA (one that self-identifies as a tax advisor would be even better) that is competent in real estate, then getting coffee with them and your favorite asset preservation attorney and pepper them with questions.An LLC is a liability protection play and NOT a tax play. However, the way your entity is formed will have implications on your taxes, so you'll want to hold both in view as you figure out how to structure your businesses.You might find that something like a series LLC offers a bit of both, but I'd listen to whatever the attorney and the CPA come up with :)

Cody L. · Answer

What do you mean how? Let's say I have three properties, each with their own EIN:123 Main Street LLC. It owns 123 Main St. It makes $5,000 in 2022456 Frank Street LLC. It owns 456 Frank St. It makes $6,000 in 2022789 Lisa Ave LLC. It owns 789 Lisa Ave. It makes $9,000 in 2022I send three income statements to my tax guy, showing three properties, that made $5k, $6k, and $9k. He puts them on my tax return on my schedule E just as if they were in my personal name.And boom -- Cody made $20k from RE.

Eric Goldman · Answer

you need an EIN for each LLC get with a tax professional that understands what you are doing!

Cody L. · Answer

I'm seeing a lot of people saying you need to file a tax report for each LLC. That's not true. I have 48 LLCs. I file 1 tax return. They're all disregarded entities and what the IRS cares about is how much did that property make. Whatever it makes shows up on your tax returns. Unless my tax guy is doing it wrong... But that's how I've done it for ~10 years. At the start of the year I run an income statement for each property and send it to him. I don't think the IRS cares one bit about if the property is under 101 Main St Home LLC or not.

Beth Rook · Answer

Thank you, I'm still confused on how the taxes work, I may have to talk with a professional at some point.

Matthew Irish-Jones · Answer

Yes each LLC has a tax return and a separate EIN. You will have a tax return for each entity an LLC stand for Limited Liability Company. So each formation creates a company. The rates are based on your personal tax rates, LLC's are basically a pass through when it comes to rates. Many investors put several properties in each LLC. I have 3-5 properties in each LLC. I don't want too many assets in any one LLC, and I also don't want to file a tax return for every single property I own. The safest way to protect yourself is an LLC for every property, but investing is about taking calculated risks. There is a cost to overprotecting yourself, over insuring, etc... Each investor has to decide for themselves how much risk they can stomach.

Beth Rook · Answer

Cody thank you :).

Beth Rook · Answer

Cody I was wondering how you file 1 tax return with muliple EIN number.

Beth Rook · Answer