A disregarded entity refers to a single-member LLC that, while maintaining its legal distinction from its owner, is not recognized as separate for tax purposes by the Internal Revenue Service (IRS). This classification allows the LLC owner to report income and expenses directly on their personal tax return, blending the legal advantages of an LLC with the simplicity of personal tax filing.
How does the new disregarded entities function work?
Disregarded entities are business entities that are not recognized as separate from their owners for tax purposes. This means that the business's income and expenses are reported on the owner's personal tax return.
NOTE: The disregarded entity function allows for the proper tracking and reporting of this information for US LLC accounts only.
This feature allows for the tracking of disregarded entity data, including the partner's Social Security Number (SSN), full name, and whether the entity is disregarded or unknown.
There are two ways an investor can add or update the disregarded entity classification:
Create a new account while making a Commitment during the investment process
Edit (Update) an existing account in the portal
Step by Step Instructions for Updating an Existing Account
If an existing Account needs to be updated with disregarded entity information, log into your portal account.
STEP 1: Click on the Settings tab.
STEP 2: Click on Investing Accounts:
NOTE: The highlighted message will only appear when there is a US LLC Account that requires the Disregarded Entity information to be added:
STEP 3: To update an existing investor Account with a disregarded entity, click the Edit button by the Tax ID:
STEP 4: Select the appropriate option for this Account. Add or update the Tax ID if needed:
Option: I don't know
If you select this option, you are required to add the Account Holder Full Legal Name and the Tax ID for the Account Holder
NOTE: When entering the Tax ID, do not use hyphens. Only use the numbers.
Option: This Account is a Disregarded Entity
If you select this option, you will designate this Account as a Disregarded Entity. You are required to add the Account Holder Full Legal Name and the Tax ID for the Account Holder:
Option: This Account is a NOT A Disregarded Entity
Selecting this option will identify this Account as an entity using the Tax ID of the LLC. Remember to add or update the Tax ID for the US LLC:
NOTE: When entering the Tax ID, do not use hyphens. Only use the numbers.
STEP 5: After clicking the Update Tax ID button, you will receive an confirmation message and the newly entered information will display as shown below:
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