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SS# and W-2's


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He should just apply for an EIN--it's easy enough to do.  Best argument in favor is that he won't have to give his SS number to clients.  Operating without an EIN makes me wonder if his business banking is combined with his personal, which is a big No No!  

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If you are a sole proprietor you are no longer allowed to use your SSN once you have employees. It isn't illegal to merge your personal banking and business if you are a sole proprietor. If no taxes are withheld and it's for their child - should it be a 1099?

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31 minutes ago, Lion EA said:

W-2 for the child or else he'll pay SE tax. And, he's not an independent contractor if his only work is for his parent's business using the exclusion from FICA for a child of the owner.

Even if the child works for 1 or 2 other people it's highly unlikely the child is an independent contractor.

In several of the Employment Tax Audits that I have been involved,  the auditor did extensive on line search in the state and other databases

looking for confirmation that the individual in question was actually in business .

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Of course it's not illegal to merge personal and business accounts, but it sure creates an accounting and tax audit nightmare.  Was that gas fill up for the business van or the wife's car?  The trip to Staples for back-to-school supplies or office copy paper?  We have clients whose monthly bank statements are four single spaced pages of everything from morning coffee to bars to the occasional business website bill.   Their reconciliations cost a lot because they take so much time.  Also makes it impossible to tell how much money you're making or spending--should you raise prices, buy that new piece of equipment?

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