When Converting an LLC to a Corporation
An individual forms a Delaware LLC and owns 100 percent of the LLC units. The LLC applies for an EIN as a disregarded entity. However, if the LLC wants to change its tax classification to a C corporation, the LLC remains an LLC under state law. To complete this conversion, the LLC must file an IRS Form 8832 Entity Classification Election.
Applying for a New EIN
When starting a new business, it is often necessary to obtain a new Employer Identification Number (EIN). All multi-member LLCs require an EIN, whether they are taxed as a partnership or have elected to be taxed as a corporation. Single-member LLCs may not need an EIN if they operate as a disregarded entity and choose to file income tax returns using the owner’s Social Security number.
If a business with an existing EIN restructures, such as converting from a corporation to an LLC or changing ownership, a new EIN is required. The IRS website provides details on specific EIN requirements for LLCs.
Scenarios for Requiring a New EIN
- Sole proprietors need a new EIN if they incorporate, become part of a partnership, or are subject to bankruptcy.
- A new EIN is needed when an existing business changes its structure, like when converting an LLC to a corporation.
- Changing a business name may not require a new EIN, but you should update your information with the IRS.
Obtaining an EIN for Your LLC
After forming an LLC, it is advisable to apply for an EIN as soon as it is registered with the state. While single-member LLCs do not necessarily require an EIN, obtaining one is beneficial for separating personal and business finances.
Can I use my old EIN number for a new LLC? No, you cannot use the same EIN for different entity types or unrelated businesses. EINs are permanent and do not expire. The IRS assigns EINs to differentiate businesses for tax purposes.
How to Get an EIN
An LLC can obtain an EIN quickly online, by mail, or by fax using Form SS-4. While U.S. applications are free, international applicants cannot apply online but can do so by mail, fax, or phone call.
Conclusion
The need for a new EIN often arises when substantial changes occur in the structure or ownership of a business. However, the IRS will make the final decision—certain re-organizations, such as changing from a corporation to an LLC or vice versa, will necessitate a new EIN.