As your business expands, you may need to change its entity type. What started as a sole proprietorship may need to evolve into a partnership. Maybe you are planning to incorporate your partnership. Eventually, your company’s profits and growth potential will outweigh the tax advantages of the structure you started with. You may be wondering, “Do I need a new EIN for each business structure change?” Read below to find out when to get an EIN number change.
New EIN for Sole Proprietors
If you’re operating as a sole proprietorship, you’ll need a new EIN if:
- You form a partnership
- You incorporate your company
- You inherit or purchase another business and operate it as the sole proprietor
- You file for bankruptcy
If none of these apply to you, then you don’t need a new EIN.
When Partnerships Need a New EIN
Are you wondering, “When do I need a new EIN for my partnership?” then here are your answers:
- You incorporate your business
- You take over and independently operate your company as a sole proprietorship
- You start a new partnership
If none of these situations are relevant, don’t worry about applying for another EIN.
Corporation EINs
Do you have a corporation? If so, you’re required to get a brand new EIN if any of these situations apply to you:
- You get a new charter from your secretary of state
- You use the parent company’s EIN as a subsidiary
- You become a subsidiary of a parent company
- A statutory merger takes place, creating a new corporation
- You change the structure of your corporation to a partnership or sole proprietorship
If you determine you need a new EIN for your corporation, learn how to get a tax form for an LLC or corporation.
Changing Your Entity
As you can see above, almost every type of business must apply for a new EIN upon changing the entity type. This means that if you are currently a sole proprietor and wish to create a partnership or incorporate, then you will get a new EIN. The same goes for every time that you make this type of change to your business.
There are many actions that you have to take as you change your business entity, so it is best to do so as few times as possible. In many cases, you have to completely dissolve your existing entity in order to create a new one, although some states have a simplified conversion process. Starting as a sole proprietorship and then incorporating or forming a partnership is the easiest move. If you already have a corporation, partnership or LLC, you will find it can be a time-consuming and expensive procedure.
New Liability Requirements
When you change your structure, you also end up affecting your tax liability and your legal liability. Therefore, you always want to discuss the decision with a lawyer to ensure it is the right move for you. This also helps you to know what paperwork you will need to do to minimize the impact on your business.
Growing Businesses
As your business grows, it is inevitable that you want to make some changes to it. Minor changes, such as altering the name or moving to a new location, will have minimal impact on the structure and foundation of your business, including your EIN. However, making a change to the business entity has a significant impact, requiring you to file some important paperwork.
In addition to changing your structure, you will have to get a new EIN. From here, you might also find that you have to alert your bank, creditors and other financial institutions of the change. Some businesses will also have to apply for new business licenses and permits under the new business entity and EIN.
Getting a new EIN is easy when you use GovDocFiling. Just fill out our convenient federal EIN application to get started.
FAQs
Changing Your Entity
Do I need a new EIN if my business type changes? ›
Generally, businesses need a new EIN when their ownership or structure has changed. Although changing the name of your business does not require you to obtain a new EIN, you may wish to visit the Business Name Change page to find out what actions are required if you change the name of your business.
Can you transfer an EIN to a new entity? ›
An Employer Identification Number (EIN) is a tax identification number for a business. You cannot transfer it to a new owner. In fact, the Internal Revenue Service (IRS) mandates a new EIN in certain circ*mstances, including a new owner or change in structure.
Do you need a new EIN for each business? ›
Do You Need Multiple EIN Numbers for Different Businesses? If business owners have set up various businesses as independent legal entities (e.g., separate LLCs, C Corporations, S Corporations, or any combination of these), they will need to obtain an EIN from the IRS for each entity.
Can I use old EIN number for new business? ›
Once an EIN has been assigned to a business entity, it becomes the permanent Federal taxpayer identification number for that entity. Regardless of whether the EIN is ever used to file Federal tax returns, the EIN is never reused or reassigned to another business entity.
How do I change my company name and keep the same EIN? ›
Simply changing your name does not require a new EIN number. To update your EIN, mail a signed letter to the IRS at the address you file your return with. If you are a partnership or corporation, you must attach a copy of your formal name change document from the state.
Do I need a new EIN if I change from sole proprietor to LLC? ›
Even if you have an employer identification number (EIN) for your sole proprietorship, you'll need to file a Form SS-4 for a new EIN for the LLC. The EIN is a nine-digit number the IRS assigns to businesses for tax filing and reporting purposes.
Can I use the same EIN for multiple Dbas? ›
Do I need a separate EIN for each DBA? No, you will use the same EIN for a business and all its dbas. Can you get an EIN as a sole proprietor? You can, and many sole proprietors choose to do so for tax benefits and added privacy.
Can two entities have the same EIN? ›
You cannot use the same EIN for multiple businesses, even if they are owned by the same person. EINs are not limited, so you may apply for as many as you need. You are dividing your business into separate entities.
How do I update my EIN information? ›
Identify the information that has changed (LLC name, removal or addition of owners, address/location of the LLC). All other changes should be mailed to the IRS based on the state the entity's principal business, office or agency is located. The IRS will send a letter confirming receipt of your updated information.
When filing a current year tax return, you can change your business name with the IRS by checking the name change box on the entity's respective form:
- Corporations – Form 1120, Page 1, Line E, Box 3.
- S-Corporation – Form 1120S, Page, 1, Line H, Box 2.
A single business can have more than one EIN. As long as you report your income and expenses correctly, you should not have anything to worry about. Just make sure that you have substantiation to respond with if you receive any correspondence from the IRS.
How do I update my business information with the IRS? ›
Use Form 8822-B to notify the Internal Revenue Service if you changed your business mailing address, your business location, or the identity of your responsible party.
Can I apply for a new EIN if I already have one? ›
If you already have an EIN and the organization or ownership of your business changes, you may need to apply for a new number. For more information, refer to Do you need an EIN and Publication 1635, Understanding Your EINPDF.
How do I know if my EIN number is still active? ›
Call the IRS. The best number to call is (+1) 800-829-4933. When you hear the various menu options, select option 1 for English or 2 for Spanish, then option 1 for EIN inquiries, and then option 3. You can call during IRS Business hours: 7:00 a.m. - 7:00 p.m. Eastern Standard Time (GMT-5).
What can I do with my new EIN number? ›
This EIN is your permanent number and can be used immediately for most of your business needs, including:
- Opening a bank account.
- Applying for business licenses.
- Filing a tax return by mail.
If you have an existing EIN as a sole proprietor and become a sole owner of a Limited Liability Company (LLC) that has employees, needs to file an employment or excise tax return, or is establishing a pension, profit sharing, or retirement plan, you need to get a separate EIN for the LLC.
Can I use the same EIN for multiple businesses? ›
If your two businesses have the same structure, then you can use the same tax ID. This can make things simpler, as you will have fewer forms to fill out and fees to pay, as well as the ability to file the taxes together.
How do I change my business structure with the IRS? ›
File a DBA (Doing Business As) form (you can do this online on your state's website and with the IRS) Register with the IRS to apply for an updated Employer Identification Number (EIN) (you'll need that to file your taxes and pay your employees) Register your new business structure with the state.
