What is a disregarded entity for tax purposes?

A Limited Liability Company (LLC) is an entity that is created at the state level. Depending on how many members there are & which elections are made, the IRS will classify LLCs either as a corporation, partnership, or as part of the owner’s tax return (a “disregarded entity”). A domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and elects to be treated as a corporation. For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner unless it files Form 8832 and elects to be treated as a corporation.

If a single-member LLC does not elect to be treated as a corporation, the LLC is a “disregarded entity,” and the LLC’s activities should be reflected on its owner’s federal tax return. In layman’s terms, a “disregarded entity” means the company is not separate from the individual that owns the LLC for federal tax purposes.

If a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, the W9 should provide the owner’s SSN or EIN, not the LLC’s EIN

Source: https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies

If you have any other questions regarding the W-9, please feel free to email us at team@getw9.tax!

Thanks!
Vic @ getW9
https://getW9.tax

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