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Side Hustles & EIN?

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  • Avatar EngineerDoc 
    Participant
    Status: Physician
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    Joined: 08/16/2019
    Earnest refinancing bonus

    Long-time lurker and first time poster!

     

    My husband is looking to start a side-hustle w/ his related engineering expertise from his prior ‘life’ he likes to say haha! (He’s a practicing Peds Hospitalist).

    We have an EIN as we employ our Nanny through care.com which takes care of all of the expenses/taxes/fees associated w/ having our nanny.

    Our question is – do we need to have ANOTHER EIN for this new side hustle business?

    And…for those who have set up a side-hustle – did you do it under a LLC, just go at it alone, or…?

     

    Thanks!

     

    Wife of Enginerd

    #239331 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8137
    Joined: 01/09/2016
    1. I would get a 2nd EIN if he is planning to set up a solo-k. I don’t think it is essential, but I’d want to separate the 2 activities in the IRS database and EINs are quite easy to apply for and receive.
    2. First of all, if you’re in CA, that’s not an option. In general, you just need a sole proprietorship. The sole purpose of an LLC is asset protection and an LLC gives no protection to a professional.
      • Now, if this side hustle has the potential to earn $350k – $400k and/or your husband will have employees, then consider an s-corp.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #239338 Reply
    Liked by StateOfMyHead
    Avatar CFEonline 
    Participant
    Status: Physician
    Posts: 136
    Joined: 09/05/2018

    Here’s another EIN question, is the information from the application public? Can I use my home address / phone safely if I don’t want people to be able to Google me and find my home? Or should I get a po box, second line, etc?

    #239348 Reply
    jfoxcpacfp jfoxcpacfp 
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    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8137
    Joined: 01/09/2016

    Who knows how all those companies that sell identifying information get it? Think of all the places you have listed your phone number and address. The IRS doesn’t release it, but it is very easy to get your EIN, much more so than SSN, so I’m not sure if you are exposing yourself by listing it or not. I’ve never considered this and have not had a problem in decades of having an EIN. (Granted, my address is my business location.) I wouldn’t go to the trouble of taking out a PO box for this, though – I would think you’re trying to catch a minnow in a pretty big ocean if you think that would stop those who are determined to get your address and phone number. At least, so say the robo-callers I get on my cell phone.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #239349 Reply
    Avatar CFEonline 
    Participant
    Status: Physician
    Posts: 136
    Joined: 09/05/2018

    Got it, I’m more thinking the angry patients from the ER who threaten me or to hunt down my family, etc.

    Also, regarding one vs many EIN, is it beneficial to separate different business ventures as well? For instance, if as a sole proprietor I were to have income doing chart reviews, work a few shifts at a second hospital, as well as expert witness work, are there pros and cons to doing that all under one EIN vs multiple? If multiple EIN could I still contribute all those streams of income to one i401k?

    #239351 Reply
    Liked by StateOfMyHead
    Avatar CFEonline 
    Participant
    Status: Physician
    Posts: 136
    Joined: 09/05/2018

    Also to OP, check out this book https://www.amazon.com/LLC-vs-S-Corp-C-Corp-Explained/dp/1950967018 I am partway through it and find it helpful on understanding the best business structure (it covers sole proprietor and partnerships as well). You can get it free through a Kindle unlimited 30 day trial, as well as many other good books from the same author.

    #239352 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8137
    Joined: 01/09/2016

    Also, regarding one vs many EIN, is it beneficial to separate different business ventures as well? For instance, if as a sole proprietor I were to have income doing chart reviews, work a few shifts at a second hospital, as well as expert witness work, are there pros and cons to doing that all under one EIN vs multiple? If multiple EIN could I still contribute all those streams of income to one i401k?

    Click to expand…

    I wouldn’t go so far as that. If you opened a solo-k for your side hustles, for example, all of the profits w/b aggregated under that one umbrella. I just wouldn’t want to mix in payroll for a nanny. And if you were to go into partnership in one venture, then you’d want a separate EIN for that. It’s pretty subjective, I’m just trying to think practical.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #239353 Reply
    Liked by EngineerDoc
    Avatar GPGP 
    Participant
    Status: Physician
    Posts: 186
    Joined: 05/02/2017

    It must not be that hard to get a home address. I had a super-nice patient knock with a Christmas present one year. Luckily not that patient I fired for drug /narcotics issues! I’m still not entirely sure where she got the info. She must have noticed my surprise and has been gracious enough to still give presents, but bring to work. 😀

    #239380 Reply
    Liked by G, jfoxcpacfp
    Avatar CFEonline 
    Participant
    Status: Physician
    Posts: 136
    Joined: 09/05/2018

    Simple and practical is good!

    I guess another way to protect anonymity would be a DBA name for sole proprietorship. Other than the relatively minor expense and hassle of registration is there a reason not to do that? Would it significantly increase complexity of opening a bank account for the sole proprietorship, or is there anything special about working in clinical medicine where a DBA wouldn’t be allowable if the state otherwise allows DBA for sole proprietorships?

    #239406 Reply
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2509
    Joined: 05/01/2017

    Remember that Fidelity allows you to do a solo 401k with your SSN not an EIN.

    I’m on year 3 of doing this, absolutely no problem.

    You def don’t want to run nanny and consulting through the same EIN, that would be weird.

    #239435 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8137
    Joined: 01/09/2016

    Simple and practical is good!

    I guess another way to protect anonymity would be a DBA name for sole proprietorship. Other than the relatively minor expense and hassle of registration is there a reason not to do that? Would it significantly increase complexity of opening a bank account for the sole proprietorship, or is there anything special about working in clinical medicine where a DBA wouldn’t be allowable if the state otherwise allows DBA for sole proprietorships?

    Click to expand…

    We use DBA for both businesses (Fox & Co CPAs and Fox Wealth Management) but that is only because we’ve changed the names of both (from Johanna Fox, CPA and Milestones Financial Planning) and it was simpler than re-registering everything. AFAIK, the dba can easily be traced to the registered name. That is in KY, of course, but it’s probably same/similar in most states.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #239441 Reply
    Avatar G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1799
    Joined: 01/08/2016
    It must not be that hard to get a home address. I had a super-nice patient knock with a Christmas present one year.

    Click to expand…

    Wow.  Thank you for sharing that…seriously, thank you:  I had just always assumed that a patient knocking on my door should be met with a firearm.  Not trying to be melodramatic, just realistic.

    information from the application public

    Click to expand…

    have you googled your name and address already?  it is amazingly easy to find; thank you, internet.  I initially had my state business license listed as home address and that is easy to find.  Any public commentary (government meetings) and it pops up.  And finally our county assessor has details such as a photo, purchase price, number of bathrooms….

    #239451 Reply

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