Sole Proprietor/ Business Account/ Question

<p>Hi Folks:</p>

<p>Need some advice from any financial aid experts.</p>

<p>I am opening a sole proprietorship this year. I really don't need an EIN (employee identification number) from the IRS for business reasons. But for financial aid consideration, perhaps I do need one.</p>

<p>If I have a business account with cash, will it be counted as my asset and towards my son's financial aid next year if I use my social security number to hold that cash? Do I need an EIN? Or does it make any difference at all?</p>

<p>My son is a junior so this is the base year for when we apply for financial aid 2012.</p>

<p>Thank you so much.</p>

<p>Yippee!</p>

<p>If your business qualifies as exempt under FAFSA the business assets are exempt, including the bank account with your SS#, though I would hope it was vested in the business name.</p>

<p>If this business is owned by you, it is an asset to you. Doesn’t matter if it has an EIN or not. </p>

<p>I’m not a FAFSA expert, but why would a business qualify as exempt under FAFSA?</p>

<p>Because a small business owned >50% by the family and with less than 100 employees is an exempt asset in FAFSA.</p>

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<p>OP: are you quite sure that you don’t need to keep your business and personal finances separate? I am not familiar with your type of corporate structure, but I do own an S Corp. The IRS requires us to keep things strictly separated, with the business accounts having their own tax ID number and filing their own tax forms.
Any money we take out of the company has to be accounted for either as profits taken or through payroll.</p>

<p>In addition to being able to prove that we have a bona fide company in case we are ever audited by FAFSA, the corporate structure also provides a measure of safety to business owners. In the event that our company went bankrupt, our personal assets such as our house would not be available to creditors. However, if the company’s creditors could ever prove that we had not kept our accounts separate they could “pierce the corporate veil” and go after us personally.
This is really something you should speak to an accountant about.</p>