Tax Law (Questions About Taxes)/PLLC in 2 States with same EIN
I started my PLLC on April 2012. I hired a company to do all the initial documentation to start my PLLC in the State of VA and to requested the EIN number for my PPLC.
However, I decided to expand my PLLC to NC. I sent all the information for a Foreign PLLC to the NC Secretary of State and sent my EIN. Now is time to do my taxes and I realized I just have one EIN but my PLLC is in 2 different States, and I do not know how to separate the expenses and income from the 2 PLLCs. I have 4 independent contractors in NC, but it is just me in VA. How can I fix this problem? Do I need more than one EIN?
Okay, let me start with your stated question:
One EIN is enough.
That is for your Federal Tax Return, you wouldn't want to be filing 2 federal returns, especially if your accounting isn't tracking your income properly.
You need to file a total of 3 tax returns. One Federally, One in Virginia, and One in North Carolina.
The Federal Return would show 100% of your revenue and the State Returns would show that portion of the income that is attributable to that state.
Now for the ugly parts. The parts you didn't ask about but are going to be cause of catastrophic failure:
Part one: Your Record Keeping.
If your accounting is not complete; not complete enough that you even can't determine where your revenues came from you should not continue in business. I'm not trying to be rude. I'm trying to keep you from losing everything you have.
Sure, you can go abut doing business without keeping any records. In my office we refer to that as "GTA" (Good Til Audit#. Everything is GTA. Tax Straddles, Deductions, accounting strategies, even the "Nope, got no records" play is GTA.
But at the time of Audit, then things change, and change quickly. Can't prove it, with absolute accuracy, and justify it? Then the IRS will simply disallow it. For every year you did it. Back taxes, penalties and interest. That'll leave a mark.
Part two: Your Independent Contractors
I could be wrong, but if your workers are trained by you, provided tools by you, don't have the right to let someone else do the job, they aren't "Independent". Do you know what the IRS calls a non-independent contractor? EMPLOYEE.
All the benefits you though you were getting by using 1099 IC people instead of employees? GTA.
Did you know that even if you could do everything right as far as 1099 ICs, you can still have it all collapse, simply because the IC didn't pay their self employment tax.
Guess what, you then get to pay the payroll taxes on 100% of the total amount you paid, for ALL of your recharacterized Common Law Employees, for ALL YEARS.
If you quit now #button it all up and file a final tax return# your potential of audit is pretty low #and even if you get audited were only talking 1 year of problems#.
Then you can start over. . .
Here is a quote I use when coaching kids in sports:
"Almost means not quite. Not quite means not right. Not right means wrong. Wrong, means the opportunity to start again and get it right."
You may choose to write this idea off as ludicrous. But, I wish you wouldn't. I'd rather you tune for success than continue toward failure. There are great things that can be done and I would encourage every capable and willing person to get into business.
If someone is heading into business they need to realize that their business is not their craft, their business is all the things that surround their craft. And they must master that. If someone is unwilling to master "The Business" they should remain a craftsman in someone else's business.
And maybe the PLLC is no longer your best structure anyway. It might be a perfect time to reassess now that you are no longer a "start up" and have moved to "successful business".
Call me and we can work out a strategy for success.