When to Get a New EIN for Your Business Operations

An Employer Identification Number (EIN) is a unique identifier assigned by the IRS to businesses for tax purposes. While an EIN is typically permanent, certain changes in business operations may require obtaining a new one. Failing to do so can lead to tax complications and compliance issues.

Shifting Business Structure

Changes in a company’s legal structure often require a new EIN. When a sole proprietorship transitions into an LLC, corporation, or partnership, the IRS considers the new entity separate from the original, necessitating a new identification number. Sole proprietors report business income on their personal tax returns, while other structures file distinct tax documents, making a new EIN necessary.

Corporations may also need a new EIN if a reorganization results in a new corporate entity. A C corporation electing S corporation status does not require a new EIN, but if a corporation dissolves and a new one is created, it is treated as a separate entity. Partnerships that incorporate or merge with another business typically need a new EIN due to changes in tax treatment.

LLCs have unique considerations. A single-member LLC electing corporate taxation does not need a new EIN, but if it transitions from a disregarded entity to a multi-member LLC, a new one is required. Similarly, if an LLC restructures into a partnership or corporation, the IRS mandates a new EIN.

Ownership Modification

Changes in business ownership can require a new EIN, depending on the extent of the modification. When a sole proprietorship is sold, the new owner must obtain a fresh EIN since sole proprietorships are tied to an individual’s Social Security number.

For partnerships, minor ownership adjustments do not require a new EIN. However, if more than 50% of the capital and profit interests transfer within a 12-month period, the IRS considers the partnership terminated, requiring a new EIN. If a partnership dissolves and a new one forms with different partners, a new EIN is also necessary.

Corporations generally retain their EIN when shareholders change, but exceptions exist. If an ownership change results in a legally distinct corporate entity—such as in a merger where the surviving company is separate from the original—a new EIN is required. This is common in acquisitions where the purchasing company forms a new corporation to absorb the target business. If a corporation converts to a sole proprietorship or partnership due to an ownership change, the IRS treats it as a new entity, requiring a new EIN.

Inheriting an Existing Business

When a business is passed down due to the owner’s death, whether a new EIN is required depends on the business structure.

For sole proprietorships, the EIN is linked to the deceased owner and cannot be transferred. The heir must apply for a new one if they continue operations. Any income earned after the owner’s death is reported under the estate’s tax identification number until the new owner formally re-establishes the business.

Corporations and partnerships generally retain their EINs when an owner or shareholder dies, provided the entity remains intact. However, if the death triggers a legal dissolution—such as when a partnership agreement mandates termination upon a partner’s death—a new EIN may be required. If the successor restructures the business into a different entity type, the IRS treats it as a new enterprise, requiring a fresh EIN.

Bankruptcy or Receivership

Filing for bankruptcy or entering receivership can change a business’s tax and financial obligations, sometimes requiring a new EIN.

Under Chapter 7 bankruptcy, where a business undergoes full liquidation, no new EIN is necessary since operations cease. Under Chapter 11, which allows reorganization, a new EIN may be required if restructuring results in a legally distinct entity, such as when assets transfer to a newly created corporation or LLC.

Receivership follows similar principles. If a court-appointed receiver manages operations without changing the entity’s legal status, the existing EIN remains valid. However, if assets transfer to a new company as part of restructuring, the IRS typically requires a new EIN. This often happens when creditors form a new entity to acquire and continue the distressed company’s business.

Resuming Operations After Closure

If a previously closed business restarts, whether a new EIN is required depends on how the IRS views the entity’s continuity.

If a business was formally dissolved at the state level or inactive for an extended period, the IRS may consider it a new entity upon reactivation, requiring a fresh EIN. This is especially relevant for corporations and LLCs that were administratively dissolved and later reinstated. Some states treat reinstatement as a continuation, while others require new registration, which may necessitate a new EIN.

For sole proprietors, if the business was inactive but never formally closed with the IRS, the original EIN can typically be used upon resumption. However, if the business was shut down and later restarted under a different structure—such as converting from a sole proprietorship to an LLC—the IRS requires a new EIN. Partnerships and corporations that previously filed a final tax return indicating closure may also need a new EIN if they resume operations, as the IRS considers the prior entity terminated.