Federal law requires that you create an EIN for doing business as a truck owner. This fact is applicable even for truck owners who are apparently business owners by default. Federal law states that a tax payer must require an EIN before proceeding with few federal tax filings including the Form 2290, The Heavy Highway Used Tax Form.
You can apply for an EIN either by filing an SS-4 application or by logging on to the IRS website https://www.irs.gov/businesses/small-businesses-self-employed/how-to-apply-for-an-ein.
Tips on Business Names:
When you complete the process to receive your EIN, and choose the type of business, you will also have the chance to choose a Doing Business As name, also referred to as a DBA name. While this name remains attached to the EIN, it is important to note that it is NOT the legal name of the entity.
Should you create an EIN as a sole proprietor, your name is the legal name of the entity. If you go through an incorporation process, the name on your papers of incorporation is the legal entity name. Be sure to use the legal entity name when filing tax forms, such as the heavy vehicle used tax form 2290.
Listing out your Business under the right category:
Most HVUT tax payer’s questions during creating their account with www.truckdues.com is
Under which category should I report my business?
I am an owner operator, I don’t own a business. What do I type in there on the business name section?
Types of businesses which basically encounters this scenario by far are as follows:
Many owner/operators are sole proprietors. To be a sole proprietor, you do not have to do anything other than obtain your EIN. No paperwork, no legal fees to establish a legal entity, no stress over what type of business to be.
So why wouldn’t everyone do it this way? Sole proprietors remain personally liable for lawsuits files against their businesses. That means if you have an accident with a motorist, and they sue your business, in fact they are really suing you.
Also, sole proprietors pay taxes on the earnings from the business on their 1040, or personal tax form. You may find advantages in the other legal structures to minimize some of those taxes.
Limited Liability Company (LLC)
Yet another famous structure with owner/operators, the LLC creates a legal structure separate from the personal assets of the owner(s). LLCs also allow the debt from the business to be kept separate from personal obligations.
While that reduces the amount of stress you may have from fear of lawsuits or bankruptcy in your business harming your personal situation, the taxation remains similar to a sole proprietorship for a single owner. So the profit or losses of the business are the same as those of the owner.
In case if the LLC is formed by a group of partners, the taxation will resemble that of a partnership
A partnership can be similar to either of the first two options above. You can enter into a partnership where each partner acts as a sole proprietor, or you can construct the partnership as an LLC.
Unless made under an LLC, a partnership does not provide relief from liability for lawsuits. The taxation of profits or losses goes on the 1040. Benefits of partnership include spreading some of the risk and combining the different skills of two or more owners to provide a better service or product to customers.
An S corporation has shareholders. Like an LLC, an S corporation is an independent legal structure separate from the shareholders to separate personal assets from business assets. Owners must still report their income from the S corporation on their individual taxes, but in this case that eliminates the need to report them at the corporate level, preventing double taxation.
There are also certain requirements to qualify as an S corporation:
- Have only allowable shareholders.
- Have no more than 100 shareholders.
- Be a domestic corporation.
- Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).
A C corporation shares similarities with an S corporation, but has a few important differences. There is no limit to the number of shareholders. The corporation also pays tax on the corporate profits, while shareholders pay tax on dividends or capital appreciation, should they sell their stock at a profit. Shareholder also may not deduct a loss based on their ownership of stock in a corporation that posts a loss.
Should you have any more questions than this, Please feel free to reach our support team @ (347) 515-2290 [9. AM through 5 PM, Central Standard Time including weekends and all major federal holidays] or write us: firstname.lastname@example.org or Live chat with our support team for instant help.