Getting an Illinois Tax Id and EIN before getting an LLC?

[starterkit]

I would like to start an LLC but I was wondering if I could get an EIN number and a State ID number before paying for an LCC?

[Freelancier]

The EIN and state IDs going to be in your name or the name of the LLC? If in your name, no problem, although of limited use once you get the LLC. If in the name of the LLC, you can't, because you don't own it until you pay for it.

[starterkit]

Oh I see. The LLC would be created with my name but only using my Middle Name and Last name. If I got the EIN and ID would that be an issue to get using my Middle Name and Last Name since legally it is still my name? What did you mean by limited use once I did get the LLC? Now I am wondering what would be the point of getting an LLC if I am already in a way creating a business.

[Freelancier]

If I got the EIN and ID would that be an issue to get using my Middle Name and Last Name since legally it is still my name?
Your middle + last is not your legal name. You cannot legally put the letters "LLC" after your name. And when you get those IDs from other government agencies, if it's an LLC, it'll have an LLC after the name and if it's just a d/b/a, it won't. So it's different according to all the government computers in the world :)

What I meant by "limited" is that once you start using the LLC for your business, the EIN and other IDs would be created for you personally and not the LLC, which is a different entity. So it wouldn't be of any use to the LLC.

Even if it uses parts or all of your name, an LLC is not you. It's a separate entity. And you'd better treat it as such if you want to retain those liability protections.

[starterkit]

Wow You were a great help for this information. Thanks!

[starterkit]

I forgot to ask. If I use my first and last name for the EIN (which would be considered my legal name) would I need to have a different state tax ID or use the same one I have? How would that work out with taxes at the end of the year. I wanted to start selling items online.

[Freelancier]

Once you create an LLC, that's a different entity with the letters "LLC" at the end. So it would need a different EIN and state tax IDs, because it identifies a different entity.
As for taxes, single-person LLCs are disregarded from the IRS' perspective, so the taxes from that flow to Schedule C on your personal return.

[starterkit]

I am sorry I meant if I decided to not go the LLC route.

[Freelancier]

Yes, you can use your name if you want and get an EIN based on that. I'd use your full name, not a partial, just to make sure it's unique within their system and not confusing to the computers when it's time for you to file taxes.

[BIZDEV]

It sounds like you're not sure if you are going to go the LLC route or not. I would ask you why you think you need the LLC designation? Most people do this because they believe the LLC protects their personal assets. This is actually not the case. While there is some protection, the protection is very easily rendered null during the every day course of running your business. If your business is new, small and not yet known if it will be profitable or if you will stick with it, setting up an LLC could be overkill. You can set up as a sole proprietor to start and change later if really needed.

[Freelancier]

the protection is very easily rendered null during the every day course of running your business.Only if you operate your business as your personal piggy bank. If you run it as an entity separate from your personal life, it's much harder to screw this up.

[BIZDEV]

Only if you operate your business as your personal piggy bank. If you run it as an entity separate from your personal life, it's much harder to screw this up.

No. That is not what I was referring to at all. I owned a franchise and have owned other businesses. On my first attorney visit before buying the franchise it was explained to me that "piercing the veil" of protection is done easily and routinely and business owners don't even realize it. Every supply/equipment vendor, bank, credit card merchant processor, landlord, etc, will require you sign a personal guarantee or they won't do business with you. And that basically negates the "protection".

[Freelancier]

Every supply/equipment vendor, bank, credit card merchant processor, landlord, etc, will require you sign a personal guarantee or they won't do business with you. And that basically negates the "protection".
I'm thinking you got bad advice from your attorney... or -- more likely -- you misunderstood him telling you that those credit agreements that you might have to personally guarantee are not covered under the corporate protections when the corporation goes bankrupt (since you signed them personally). It doesn't invalidate the corporate fiction, but it outlives the corporate fiction.

How to Avoid Piercing the Corporate Veil | BizFilings (http://www.bizfilings.com/learn/avoid-piercing-corporate-veil.aspx) and Piercing the Corporate Shield: How To Do It: How To Avoid It | Stimmel Stimmel and Smith (http://stimmel-law.com/retainer/piercing_corp.html)

Of course, IANAL and I highly recommend visiting with one before you start your business to make sure you're getting the right information.

[BIZDEV]

I'm thinking you got bad advice from your attorney... or -- more likely -- you misunderstood him telling you that those credit agreements that you might have to personally guarantee are not covered under the corporate protections when the corporation goes bankrupt (since you signed them personally). It doesn't invalidate the corporate fiction, but it outlives the corporate fiction.

How to Avoid Piercing the Corporate Veil | BizFilings (http://www.bizfilings.com/learn/avoid-piercing-corporate-veil.aspx) and Piercing the Corporate Shield: How To Do It: How To Avoid It | Stimmel Stimmel and Smith (http://stimmel-law.com/retainer/piercing_corp.html)
.

"This protection is not guaranteed however." From the first link. My attorney specializes in small business startups. He knows what he's talking about. I've seen and heard the same advice about personal guarantees countless times.

[Freelancier]

If you have to take exactly one sentence out of context in a long article that explains the responsibilities that come with maintaining the corporate veil to prove your point... well, you don't have a point. Better that you encourage everyone to read the articles and talk with their attorneys instead of trying to insist that what you heard from your attorney is going to be true for everyone.

[BIZDEV]

If you have to take exactly one sentence out of context in a long article that explains the responsibilities that come with maintaining the corporate veil to prove your point... well, you don't have a point. Better that you encourage everyone to read the articles and talk with their attorneys instead of trying to insist that what you heard from your attorney is going to be true for everyone.

I read the entire article and it didn't cover the topic I was referring to. But it did say, as I say, the LLC is not a guaranteed protection of your personal assets as most believe. And if I didn't already explicitly spell it out...everyone should seek advice from an attorney before deciding on their business structure. Don't rely on forum advice or on what everybody else is doing (jumping on the LLC bandwagon for the wrong reasons). End of discussion (on my end).