Wednesday, February 21, 2018

When Is It Time For a New EIN?

When you already have your business up and running, you most likely have an employer identification number (EIN) in place. What happens when you make changes to your business? Generally, if you change the business name or location, you do not have to apply for a new EIN. However, there are a few circumstances where you might need to apply for a new one. The situations in which you will need a new one depend on your business entity.

Sole Proprietors and Partnerships

Not all sole proprietors will have an EIN, even if they have been in business for a long time. However, if you meet certain criteria, you will need to apply for a new one. The criteria include:

     Becoming a partnership
     Purchasing an existing business
     Inheriting a business
     Undergoing bankruptcy

For partnerships, you need a new EIN if you change the structure to a corporation or a sole proprietorship after one partner leaves. Any dissolving and reformation of a partnership also will nee a new EIN, even if the business remains the same, unless it is terminated under IRC section 708(b)(1)(B).

LLCs and Corporations

LLCs will need to obtain a new EIN in the case that there is more than one owner or member or if it chooses to be taxed as a corporation. Additionally, if the LLC has excise tax filing requirements or employment tax filing, they will need a new EIN. Corporations need a new EIN when they have a new charter from the secretary of state, are a subsidiary of a corporation or the entity changes.

As you can see, you will need to get a new EIN when major changes happen in your business, especially if it changes from one entity type to another. You can apply for a federal tax ID number online, making it easy to get a new one. Learn more about how to apply for a Wisconsin EIN by contacting IRS-EIN-Tax-ID.  

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