A disregarded entity is a term used in U.S. tax law to describe a business entity that is considered “disregarded” for federal income tax purposes. In this case, the entity itself is not separately taxed; instead, its activities are reported on the tax return of its owner. A disregarded entity exists when the legal entity filing taxes differs from the one associated with the tax ID (EIN).
If your company is classified as a disregarded entity and is engaging in business with the customer who invited you to Graphite, please follow these steps to ensure accurate setup:
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Complete the W-9 Form According to IRS Instructions:
- For a sole proprietor or disregarded entity, enter the owner's name on Line 1.
- Enter the business/disregarded entity’s name on Line 2.
- Optionally, include the disregarded entity's EIN in parentheses next to the company name on Line 2.
- The owner's (or parent company's) EIN must be entered in Part I of the form.
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Update Legal Information in Graphite:
- Use the disregarded entity's company name as the Legal Name in Graphite.
- Use the disregarded entity's company name as the Legal Name in Graphite.
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Provide the Correct Tax Identification Number:
- Enter the disregarded entity's EIN in the designated field within Graphite.
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Acknowledge the Graphite Warning Message:
- To finalize and save your information in Graphite, ensure you acknowledge any warning message prompted during the setup process.
By adhering to these steps, you will help ensure compliance with IRS requirements and maintain accurate records in Graphite.