I’m changing from a partnership to an LLC, do I need to get a new tax ID?

QUESTION:

I’m changing from a partnership to an LLC, do I need to get a new tax ID? If so, I’d need to get new bank accounts and everything. It’s a big hassle.

ANSWER:

I found an interesting article that says, “converting a general partnership in California to a California LLC is as simple as filing a form and paying a fee.”  The rules may vary in other states.

Click here to read the article.

Here’s another good article on converting a partnership to an LLC.

Please note, you may still have to get a new bank account for your business even if you don’t need to get a new tax ID for your converted business.  You should check with your bank.

And if you don’t meet certain requirements, you may need to get a new tax ID (a.k.a. EIN or Employer Identification Number) after all.

You can check out the IRS rules at http://www.irs.gov/businesses/small/article/0,,id=99903,00.html

More detailed rules at http://www.irs.gov/businesses/small/article/0,,id=98011,00.html

Here are the general guidelines:

If you already have an Employer Identification Number (EIN), you may need to get a new one if either the organization or ownership of your business changes. If you incorporate a sole proprietorship or form a partnership, you must get a new EIN. However, do not apply for a new EIN if:

  • You change only the name of your business
  • A partnership or corporation declares bankruptcy
  • A corporation chooses to be taxed as an S corporation
  • You elected on Form 8832 Entity Classification Election, to change the way the entity is taxed, or you change the location or add locations
  • You elect to be taxed as an S corporation

The above list is not all-inclusive, so be sure to check with the IRS before making any changes.

Note:  Before making any business decisions based on information on this site, it is your responsibility to check with your counsel or professionals familiar with your situation.

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