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Tax Interview Legal Name

A topic by MR_Games created Jun 11, 2018 Views: 2,631 Replies: 5
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(1 edit)

Hello everyone!  Just joined.  On the tax interview during registration as a seller/creator,  for the "Legal Name" field, should it be the name of my business or my own name?  If the business is a disregarded entity for tax purposes (single member LLC) , but I'm using a business bank account should/can Legal Name be the business name?  I'm thinking it should if I'm using a business bank account, but not sure.

Please let me know how you handled the Legal Name, especially if you are the sole member of your business.

Thanks!

I just found out that when you go through the tax interview process, when you get to the EIN/SSN page, it pops up a window that says they check your Legal Name/tax ID pair with IRS, and if it doesn't match you can't continue.   Well, since I've always reported on my SSN (being a disregarded entity for Fed tax) does this mean I have to go back and change my Legal Name to my personal name?  Seems to be.  But if I do this, does this mean I can't have payouts go to my business bank account in the business name?  I'm thinking that would be too limiting and cannot be.     Or is Legal Name only for tax purposes?   Please advise.

Also, as an aside question,  Why is Legal Name asked for upfront on the first page and not on the other page with the EIN/SSN?   Seems out of context.   Then again the Legal Name field  is on itch.io page before redirecting to the Taxidentity server.    So I guess that's why, but this can be improved upon to prevent the confusion I just went through.

Admin (2 edits)

To answer your first question, you should enter your own name, as the representative of the company. That is used to prepare the tax interview. Once in the interview you should follow their instructions, and if you have to enter an entity name then you should do that.

The most important thing you provide is your tax identification number. If you're collecting payments on behalf of your business then you'll generally be using an EIN, otherwise for personal income you can provide your SSN.

The system we use has a "name change queue" that gets processed asynchronously that we go through after you've submitted the interview.  We can verify any changes if necessary after they've looked up your information in the IRS database. If a name needs to be corrected it's generally not a big deal, the most important thing is you provide the correct tax number, since that's how the IRS is going to associate the income to either you or your business when we file 1009k.

Yes, I got it to work by using SSN, since that's the info in the IRS database, even for the business activities because it is a single-member LLC, so IRS disregards the business entity for filing purposes.  I have an EIN, but can't use it because IRS doesn't recognize it, since I never filed with it, because they disallow it.  So, no matter.  It's still for the business, but is all filed together with personal income.  Since you guys payout through Paypal generally,  the bank account linkage is all controlled by me, so I can keep distinct bank records for business which is my goal.   I would like to use the EIN to keep things truly distinct, but those are the IRS rules I guess.  

So, in light of this, one more general question...  to get through the tax interview, if you have a new EIN that you have never filed taxes with IRS before, would it be rejected until you have filed with IRS at least once?   Say, my business status changes from single-member LLC and I add an employee.  IRS would then allow me to file distinctly for the business under the EIN, but the EIN wouldn't be in the database until I file, correct?  So, it wouldn't be allowed on itch.io, being rejected by the tax interview?   I suppose this would be a question relevant for all new businesses with multiple employees in the year they form as well.   Would they not be allowed to use the EIN on itch.io until the following year after they formed/incorporated, being rejected during the tax interview because it is not in the IRS database yet?   Or is this only an issue with single-member companies that maybe the IRS removes the EIN from their database?   

(+1)

I can answer that:

1) The IRS loves SSN because it is the easiest way to track people, once you have it you need to use it all the time.

2) EIN is for business yes but what i think the IRS thought is that you do not have anyway to do business. I do not know it is tricky but not important or something to worry about because...

3) Once you have someone you do need a EIN this helps IRS not track you, its like an easier way to keep things in order.

4) I think you need to ask itch.io support if any changes is needed for taxes.

another website can explain this in full detail if you are still confuse: https://www.nolo.com/legal-encyclopedia/ein-employer-id-number-for-business-3612...

Thanks firecat.  

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