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I'm currently a software developer, and it looks as though I'll be transitioning to doing 1099 work much more often than W-2 work. As such, I've decided to open a personal LLC in the State of Florida. (I've already filed the Articles of Organization; I have to do the rest, like an operating agreement and the taxation status.)

I have the option to have my LLC as a pass-through entity - in essence, a sole proprietorship. I've decided not to do this and register for an EIN, and have my LLC taxed as a separate entity. (One of the major reasons for this is that with this setup, I'll be eligible to open an Individual 401k, meaning that I can max the employee contributions and bolster that with employer contributions. Awesome!)

The question is this: If I have an LLC that is not taxed as a sole proprietorship or partnership, and it is not a C-corporation, then is it an S-corporation? Or is it something different entirely?

Thanks!

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Having an EIN does not make the LLC a corporation -- your business can have an EIN even when treated like a sole proprietorship. An EIN is required to have a Individual 401(k), for example. But you can still be an LLC, taxed as a sole proprietor, and have a 401(k).

You would need to file a Form 2553 with the IRS to elect S Corporation status. If you don't do that, you're still treated as a disregarded LLC. Whether or not you should make the election is another question.

  • Yes, I'm realizing this now. I didn't realize that sole proprietorships could receive an EIN. I thought that an EIN was only for partnerships or corporations. I went ahead and applied for one, so hopefully I'll be able to establish my i401k this week. – lunchmeat317 Jul 22 '15 at 18:25

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