Do I Need a New EIN If I Convert to an LLC?

An Employer Identification Number (EIN) serves as a nine-digit identifier for businesses, allowing the Internal Revenue Service (IRS) to identify them for tax filings. Businesses often convert their structure, such as transitioning to a Limited Liability Company (LLC), which raises questions about using their existing EIN or needing a new one. This article explores when a new EIN is required after such a conversion.

Determining if a New EIN is Necessary

Obtaining a new EIN when converting to an LLC depends on IRS rules regarding changes in legal structure and ownership. A new EIN is required if the legal structure of the entity changes, or if there is a fundamental change in ownership or the way the entity is taxed.

A new EIN is needed when a sole proprietorship converts to an LLC, especially if the LLC will have multiple owners or elects to be taxed as a corporation or partnership. If a single-member LLC (SMLLC) hires employees, a new EIN is necessary. A partnership converting to an LLC also requires a new EIN if the original partnership is legally terminated and a new entity with a different ownership structure is formed.

Conversely, there are situations where a new EIN is not required. A single-member LLC electing to be taxed as a sole proprietorship (a disregarded entity) can retain its existing EIN, or use the owner’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). If a partnership converts to an LLC but the underlying partnership continues with the same partners and business operations, a new EIN is not needed. Corporations converting to an LLC require a new EIN, particularly if the corporation ceases to exist as a separate legal entity.

Steps to Obtain a New EIN

If a new EIN is necessary after converting to an LLC, apply to the IRS. The most common methods for application include online, fax, or mail. The online application is the fastest way to obtain an EIN, often resulting in an immediate assignment.

To apply online, access the IRS website’s EIN application portal, select the business type, and provide the required information. The application, whether online or via Form SS-4, asks for the responsible party’s SSN or ITIN, the legal name of the new entity, its mailing address, and a description of its business activity. Indicate the reason for applying, such as “Started a new business” or “Changed type of organization.” Online applications provide immediate EIN assignment. Applications submitted by fax or mail can take several days to weeks for processing; fax applications are usually processed within approximately four business days, and mail applications take about four weeks.

Managing Your EIN After Conversion

After converting to an LLC and determining EIN status, managing the EIN is important for ongoing business operations. If a new EIN was obtained, use this new number for all future federal tax filings, including income tax returns and payroll tax forms. The new EIN must also be provided to banks when updating business accounts and to any vendors or clients for billing and payment purposes. State tax agencies also need to be notified of the change in EIN to ensure compliance with state-level tax obligations.

If a new EIN was not required, the existing EIN (or the owner’s SSN/ITIN for a disregarded single-member LLC) continues to be used for all business-related activities. In such cases, no specific action is required regarding the EIN itself. Regardless of whether a new EIN is obtained or the existing one is retained, it is good practice to inform the IRS of any changes to the business name or address by filing Form 8822-B, Change of Address or Responsible Party, to keep records current.