Hello, Fools! I understand that a single member LLC will automatically be classified as a sole proprietor in terms of a taxable entity by the IRS unless the LLC explicitly elects to be taxed as a corporation. This would mean that all LLC income would pass through to the owner on the 1040 tax form, correct? If this is so, does the LLC need its own tax identification number? Or is the owner's TIN used in all cases?

The LLC would need its own TIN if the taxpayer as a sole proprietor would need his or her own TIN (e.g., if there are employees).

The other time a TIN would be needed would be if the LLC was a foreign LLC and had to make an affirmative election to be classified as a disregarded entity (sole proprietor). The form (8832) for making the election requires a TIN to be completed properly. US LLCs receive disregarded entity treatment by default with no need to make an election. Foreign LLCs generally have to make an affirmative election to avoid being taxed as a corporation, which would be the default treatment for a foreign LLC.

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