Q: Do I need to apply for a new EIN after changing my LLC name?
Thanks to one of our clients for this great question. There are some circumstances in which the IRS requires you to obtain a new EIN for your LLC. Luckily for our client, you don’t need to apply for a new EIN after changing your LLC’s name, though you do need to inform the IRS of your name change.
In this blog, we’ll go over:
- when you need to get a new EIN for your LLC
- how to update your LLC name with the IRS
When do you need to get a new EIN for your LLC?
Whether or not you need to get an new EIN for your LLC depends on whether you own a single- or multi-member LLC. This is because of how these two types of LLCs are taxed. By default, single-member LLCs owned by individuals are taxed as sole proprietors, and multi-member LLCs are taxed as partnerships. The IRS’s EIN rules are based on tax election, so there are some differences between the guidelines for single- and multi-member LLCs.
Single-Member LLCs
Single-member LLCs owned by individuals are taxed as disregarded entities. This means your LLC doesn’t pay its own taxes—instead, you pay personal taxes on your LLC’s income. When you file your taxes, you use Schedule C (Form 1040) to report profits and losses from your business.
Because of how sole proprietors are taxed, you can choose to use your social security number as your EIN or get a separate EIN for your business to better protect your privacy. However, this doesn’t apply to any new single-member LLC that chooses to be taxed as a C-Corp or an S-Corp or to any new single-member LLC that has an excise or employment tax requirement. If your LLC falls into either camp, you must obtain a separate EIN.
As an existing single-member LLC, you must apply for a new, separate EIN if:
- You incorporate your LLC
- You take on partners to become a multi-member LLC
- You buy or inherit an existing business
- You hire new employees or become subject to certain excise tax liabilities (Treasury Regulation § 301.7701-2) AND the primary name on your IRS account is your own name rather than your LLC’s name
- You’re subject to a bankruptcy proceeding
Your existing single-member LLC won’t need a new, separate EIN if:
- You change your LLC’s name
- Your LLC moves to a new location or adds additional locations
- You operate multiple businesses (i.e., if you operate another separate business entity)
Multi-Member LLCs
LLCs with two or more members are taxed as partnerships. Your LLC’s income “passes through” your LLC to your LLC members, who each pay taxes individually on their share of the profits. While each member reports their personal gains or losses when they file Form 1040, partnerships must also file Form 1065 so that the IRS can verify that all members have reported their income accurately.
Unlike single-member LLCs, newly-formed multi-member LLCs always need a separate EIN.
Your existing multi-member LLC will need a new EIN if:
- You incorporate your LLC
- One of your partners takes over and begins operating your LLC as a sole proprietorship
- You terminate your multi-member LLC and start a new multi-member LLC
Your existing multi-member LLC won’t need a new EIN if:
- You change your LLC’s name
- Your LLC moves to a new location or adds additional locations
- Your LLC changes its tax election to C-Corp or S-Corp
- You form a new multi-member LLC as a result of a partnership converting to an LLC and continuing to be taxed as a partnership (rather than a sole proprietor, C-Corp, or S-Corp)
- You form a new multi-member LLC as the result of a previous multi-member LLC dividing into two or more multi-member LLCs in accordance with IRC § 708(b)(1)(B)
- 50 percent or more of your LLC’s ownership changes hands within 12 months
- Your LLC declares bankruptcy
How do you change your LLC name with the IRS?
While you don’t need to get a new EIN after changing your LLC’s name, you will need to notify the IRS of your name change. How you do this will depend on your tax election.
IRS Name Change for a Sole Proprietor
You’ll need to send a Business Name Change letter to the IRS at the same address where you filed your tax return. While the IRS doesn’t specify what information must be contained in your letter, it’s a good idea to include the following:
- Your EIN
- Your LLC’s previous name
- Your LLC’s new name
- The date your LLC began using its new name
- Your LLC’s address
Your letter must be signed by a business owner or an authorized representative.
The IRS should send you an approval letter within 60 days.
IRS Name Change for Partnerships
You can update your name on your next tax return using the name change box on page 1, line G, box 3 for Form 1065.
IRS Name Change for C-Corps and S-Corps
You can inform the IRS of your name change on your next tax return. If you’re filing as a C-Corp, you’ll use page 1, line E, box 3 of Form 1120. When filing as an S-corp, you’ll use page 1, line H, box 2 on Form 1120-S.