Successfully running stealth shop but need to turn it to LLC?

[Artsy]

I have a successful Esty stealth account operating under my soon to be ex husband lol.. I kept it under 20k . I have been banned a few years ago due to copyright that's why im using his Name

I just found out Etsy is reporting payments of now over $600 in my state for 2022 (not sure how i missed that) and im freaking out. Due to our separation - he doesn't want to help.

My plan is to open a LLC & get an EIN but My concern is just being linked to my banned account. The LLC has to be under my name not my ex. Anyone has any advice on this? Im so lost and I scared to do anything in fear of putting the wrong info and getting linked/banned. but I need to figure this out before 2022. Anyone please have any advice ? under the "who would be the primary shop owner?" That info would be from the LLC (meaning my real name) It says below it would verify with a third-party service. It does say social is optional.

Should i put my real name or Ex? I do not want the 1099 to have any information about my ex or be linked to him. Or this info they are just asking is just for information purposes as it

[Gotya108]

If you are worried about names then a single member LLC is out. While states view single member LLC's as separate from their owner the federal government does not. They class single member LLC's as a disregarded entity and therefore their owners are subject to pass through taxation by the IRS. That means that for marketplaces and platforms who send in W9's they'd have to use your SSN as opposed to your EIN. That is why most specifically ask if you run a business as a sole prop, single member LLC or multi member LLC/INC. An INC with a single director on the other hand is viewed by both the state and federal government as separate entities and therefore your EIN would be used on the W9 not your SSN. Since most states only require the name and address of the incorporator(s) on the articles you could use a filing service, agent, accountant or lawyer to file the articles for you then take care of directors/ownership structure in the Directors Resolution. When opening a bank account in the corporate name to attach to your marketplace account you'd need to submit the ID, filed articles, EIN confirmation and singed directors resolution as opposed to simply ID, articles and EIN confirmation.

[yankee]

The $600 is the new IRS threshold, not your state. It is for all third party payment processors.

Upgrade to business. Add your new Business entity and EIN number and all should be well.

[Artsy]

hi! thanks for the information - So to summarize what you said if I open a LLC with my real information the 1099K Form that Etsy sends out would not use the LLC'S EIN But my social #?
and if that happens there is a possibly of being linked.

my other option is a corporation like S-Corp? Is that what you mean, thanks so much.

[Artsy]

Originally Posted by Gotya108

If you are worried about names then a single member LLC is out. While states view single member LLC's as separate from their owner the federal government does not. They class single member LLC's as a disregarded entity and therefore their owners are subject to pass through taxation by the IRS. That means that for marketplaces and platforms who send in W9's they'd have to use your SSN as opposed to your EIN. That is why most specifically ask if you run a business as a sole prop, single member LLC or multi member LLC/INC. An INC with a single director on the other hand is viewed by both the state and federal government as separate entities and therefore your EIN would be used on the W9 not your SSN. Since most states only require the name and address of the incorporator(s) on the articles you could use a filing service, agent, accountant or lawyer to file the articles for you then take care of directors/ownership structure in the Directors Resolution. When opening a bank account in the corporate name to attach to your marketplace account you'd need to submit the ID, filed articles, EIN confirmation and singed directors resolution as opposed to simply ID, articles and EIN confirmation.

hi! thanks for the information - Im sorry to be a bother but I tried to reply to you on the thread but it was not working. So to summarize what you said if I open a LLC with my real information the 1099K Form that Etsy sends out would not use the LLC'S EIN But my social #?
and if that happens there is a possibly of being linked.

my other option is a corporation like S-Corp? Is that what you mean, thanks so much.

[Artsy]

Originally Posted by yankee

The $600 is the new IRS threshold, not your state. It is for all third party payment processors.

Upgrade to business. Add your new Business entity and EIN number and all should be well.

i got an email from esty telling me today that my store would be reported if i pass 600 for 2022 sales. I know but im trying to do so without being linked.

[Gotya108]

Originally Posted by yankee

The $600 is the new IRS threshold, not your state. It is for all third party payment processors.

Upgrade to business. Add your new Business entity and EIN number and all should be well.

If she opens as a single member LLC technically she needs to add an SSN. Single member LLC's are viewed as disregarded entities by the IRS and are thus subject to pass through taxation. So unless she files 8832, any marketplace that has to submit a W9 should be doing so using the owners SSN or EIN not the LLC's EIN... Some marketplaces don't make this clear during registration (Etsy being one) by grouping single member LLC and sole props together and LLC's and INC's together as would be best practice. Clearly states on the W9 not to check box for LLC if the owner is a single member unless the owner of the LLC is another LLC that is not disregarded. Running afoul with Etsy is not a big deal but running afoul of the tax man...

[Gotya108]

Originally Posted by Artsy

hi! thanks for the information - Im sorry to be a bother but I tried to reply to you on the thread but it was not working. So to summarize what you said if I open a LLC with my real information the 1099K Form that Etsy sends out would not use the LLC'S EIN But my social #?
and if that happens there is a possibly of being linked.

my other option is a corporation like S-Corp? Is that what you mean, thanks so much.

S-Corp is fine. The difference between S and C in terms of taxes are not as substantial as they were in the past so read up on both and decide which one you feel fits your needs.

[Artsy]

Originally Posted by Gotya108

S-Corp is fine. The difference between S and C in terms of taxes are not as substantial as they were in the past so read up on both and decide which one you feel fits your needs.

Thank you again!, so i just like to triple check so If I create a C-CORP OR S-CORP the 1099K Form that etsy sends out will not have my Ex's social . It would have the new EIN from my new Corp.

And as you said i should not consider an LLC as in my case it will use my ex's social when generating the 1099K as the account is under him.

[Gotya108]

Correct, when you convert over to a business account as an C or S-corp the EIN of your entity would be used for reporting as opposed to an SSN, be it your ex's or yours. More worrying in terms of single member LLC's is that recent trends have seen many states treating single member LLC's the same as sole props when matters of financial liability and taxes come up in court so a lot of people are paying fees to open single member LLC's not realizing they have far fewer protection locally or federally then they'd have if they just checked the S or C corp box. A bit of insight for people reading this; My company uses Stripe Connect to allow clients to be paid via our CRM app. When a new client signs up if they select single member LLC during onboarding and provide an SSN and verifiable EIN during the process. When they cross the reporting threshold and the 1099-K will be generated with their SSN, If for some reason the system generated the 1099-K with their EIN and no attention status warning was generated, when we submit the 1099-K the State and IRS filing status would come back as rejected and we'd have 60 days from the date the 1099-K was submitted (not rejected) to submit the form with the correct information. If we are late the fine range from $50 to $560 depending on how late we are. If you guys are using Ebay, Etsy Amazon etc their back ends are similar so a little thing like that is a great way to get your account manually reviewed and hit with a document request.

[Artsy]

Originally Posted by Gotya108

Correct, when you convert over to a business account as an C or S-corp the EIN of your entity would be used for reporting as opposed to an SSN, be it your ex's or yours. More worrying in terms of single member LLC's is that recent trends have seen many states treating single member LLC's the same as sole props when matters of financial liability and taxes come up in court so a lot of people are paying fees to open single member LLC's not realizing they have far fewer protection locally or federally then they'd have if they just checked the S or C corp box. A bit of insight for people reading this; My company uses Stripe Connect to allow clients to be paid via our CRM app. When a new client signs up if they select single member LLC during onboarding and provide an SSN and verifiable EIN during the process. When they cross the reporting threshold and the 1099-K will be generated with their SSN, If for some reason the system generated the 1099-K with their EIN and no attention status warning was generated, when we submit the 1099-K the State and IRS filing status would come back as rejected and we'd have 60 days from the date the 1099-K was submitted (not rejected) to submit the form with the correct information. If we are late the fine range from $50 to $560 depending on how late we are. If you guys are using Ebay, Etsy Amazon etc their back ends are similar so a little thing like that is a great way to get your account manually reviewed and hit with a document request.

This is super valuable information..Etsy doesn't have a check box for LLC/S-CORP when adding your business. You just input the business name/EIN/Address and it tells you that a 3rd party will verify.. I was between s-corp and LLC and if there is a slight chance that LLC would use his social I cant risk it.

[Bigblackdog]

I have had 2 sellers from the US asking me if I would be interested in listing their products on .Com while they handle despatch.

It would appear that this new reporting regime is getting a lot of sellers very worried

There is an interesting article on the Auction Bytes site to the effect that Ebay fear they will lose hordes of small sellers, I assume Etsy must have the same worry and problem

I would not want to be an 'under the radar' US seller right now

[ebaystealth1974]

Originally Posted by Bigblackdog

There is an interesting article on the Auction Bytes site to the effect that Ebay fear they will lose hordes of small sellers, I assume Etsy must have the same worry and problem

I would not want to be an 'under the radar' US seller right now

I'm very surprised that marketplaces didn't lobby against this! If nothing else than all the extra work needing to be done...

[Bigblackdog]

Originally Posted by ebaystealth1974

I'm very surprised that marketplaces didn't lobby against this! If nothing else than all the extra work needing to be done...

Apparently they are but it appears the Dems want control of all the money

[Artsy]

Originally Posted by Bigblackdog

Apparently they are but it appears the Dems want control of all the money

This is going to be a problem for lots of stealth accounts run by family

[Gotya108]

Originally Posted by Artsy

This is going to be a problem for lots of stealth accounts run by family

The issue is that platforms were technically abusing the rules more so then "stealth sellers" were abusing platforms TOS. Technically a stealth account on a platform like Ebay or Etsy is impossible if a company like Adyen is running the KYC and back end. If any of the information entered at registration come's back even slightly off, a status alert is created for the user even if the identity info was still verified. Before they even let you list/sell a single item any needs attention alert that could cause a future 1099 to be rejected needs to be corrected and updated. They decided that in order to onboard as many accounts as possible to simply assign a risk score like a bank and let the bots deal with it until the risk score is above a threshold or the are projecting toward the 1099 reporting threshold. At which point the bots go crazy and someone in the Philippines has to manually click a button on a mouse. For the past week or two both Adyen managed marketplaces have gone on a mass suspension spree and a lot of legit and honest sellers are getting caught up in it. Much of this could have been avoided had they followed proper protocol to begin with. Right now they have alerts now from single member LLC`s using an EIN for reporting, they have alerts for people who`d recently moved or got married or divorced and changed their name shortly before registering. They have alerts from actual stealthers... Those alerts have been there since they switched to Adyen and they just failed to act so the reaction is heavy handed and clumsy. Now the situation is what it is. We either report at $600 or lose $600

[CaptAmerica]

would a partnership LLC not work just as good in this situation as a C corp? or would the partnership LLC end up revealing the SS#s of each member?

[Artsy]

Originally Posted by Gotya108

Correct, when you convert over to a business account as an C or S-corp the EIN of your entity would be used for reporting as opposed to an SSN, be it your ex's or yours. More worrying in terms of single member LLC's is that recent trends have seen many states treating single member LLC's the same as sole props when matters of financial liability and taxes come up in court so a lot of people are paying fees to open single member LLC's not realizing they have far fewer protection locally or federally then they'd have if they just checked the S or C corp box. A bit of insight for people reading this; My company uses Stripe Connect to allow clients to be paid via our CRM app. When a new client signs up if they select single member LLC during onboarding and provide an SSN and verifiable EIN during the process. When they cross the reporting threshold and the 1099-K will be generated with their SSN, If for some reason the system generated the 1099-K with their EIN and no attention status warning was generated, when we submit the 1099-K the State and IRS filing status would come back as rejected and we'd have 60 days from the date the 1099-K was submitted (not rejected) to submit the form with the correct information. If we are late the fine range from $50 to $560 depending on how late we are. If you guys are using Ebay, Etsy Amazon etc their back ends are similar so a little thing like that is a great way to get your account manually reviewed and hit with a document request.

Hi! Maybe you might know but i learned some new information what about LLCs taxed as a scorp. I found out you can elect to be taxed as a s-corp . so then does that mean the ein would be a corp and on the 1099k form once generated at thge end of year be the buisness ein not a persons social number?

[stealthnorris]

Originally Posted by Artsy

Hi! Maybe you might know but i learned some new information what about LLCs taxed as a scorp. I found out you can elect to be taxed as a s-corp . so then does that mean the ein would be a corp and on the 1099k form once generated at thge end of year be the buisness ein not a persons social number?

This is what im hoping it will be in my case as well.


Have you gotten any updated information about this?

[TowelKing]

From what I understand you can apply for a VAT number through a 3rd party, is that really the issue with a UK account?

[Artsy]

Originally Posted by stealthnorris

This is what im hoping it will be in my case as well.


Have you gotten any updated information about this?

I'm confused still , not really. I've been looking into the etsy community message boards and it seems LLC would work and they take the EIN from other shops.

I opened an LLC today & making an Ein tomorrow - From what i read I know Ein's take about 2 weeks to update in the database so Etsy can verify it. So theres no point in putting the ein tomorrow , I have to wait as it would deny.

I know you can elect for an s-corp later by filing a form so im going to keep it in mind but for now i'm trying this method and maybe ill have my friend reach out to etsy legal and ask a question about it lol.

what's your dilemma? like mine?

[authmember]

Originally Posted by Artsy

I'm confused still , not really. I've been looking into the etsy community message boards and it seems LLC would work and they take the EIN from other shops.

I opened an LLC today & making an Ein tomorrow - From what i read I know Ein's take about 2 weeks to update in the database so Etsy can verify it. So theres no point in putting the ein tomorrow , I have to wait as it would deny.

I know you can elect for an s-corp later by filing a form so im going to keep it in mind but for now i'm trying this method and maybe ill have my friend reach out to etsy legal and ask a question about it lol.

what's your dilemma? like mine?

Been operating stealth accounts in 2021, and now have a dilemma to whether add LLC or check for some other alternatives. Let us know if that works out for you, would appreciate knowing how your experience turns out