The verb “convert” (as in converting a Sole Proprietorship to an LLC) is not the best verb to use.
Technically, there is no such thing as a “conversion” from a Sole Proprietorship to an LLC.
Rather, you are “changing over” from a Sole Proprietor to an LLC. Meaning, you simply form an LLC and then stop using your Sole Proprietorship.
This means you’ll:
- Form an LLC
- Get a new EIN Number
- Stop using your Sole Proprietorship
- Cancel/withdraw your DBA (if applicable)
- File a “final” tax return for your Sole Proprietorship
- Open a new business bank account for your LLC
Where should I form my LLC?
You’ll want to form an LLC where you’re legally doing business. For most people, that’ll be their home state. For more information, please read what’s the best state to form an LLC.
How to create an LLC
After you’ve determined what state to form your LLC in, please see our LLC filing instructions page for all 50 states.
Do I need a new EIN for my LLC?
If you already have an EIN (Employer Identification Number) for your Sole Proprietorship, you won’t be able to use that for your LLC. You’ll need to get a new EIN Number after your new LLC is approved.
If you follow the LLC filing instructions (mentioned above), we’ll provide instructions on how to get a new EIN Number.
For more details, please see: do I need a new EIN if I change from Sole Proprietor to LLC?
Stop using your Sole Proprietorship
After your LLC is approved, simply stop using your Sole Proprietorship. You’ll only want to operate under your LLC moving forward.
Cancel DBA/Fictitious Name
If your Sole Proprietorship has a DBA (Doing Business As) or Fictitious Name (aka Trade Name or Assumed Name), you’ll want to file a cancellation or withdrawal form with your county or state.
File a Final Tax Return
There isn’t technically a need to file a “final” tax return for a Sole Proprietorship, but you can if you’d like to. You can simply write “Final Return” at the top of your Schedule C. But again, it’s not required.
Open a new business bank account for your LLC
After your LLC is approved and you have your EIN Confirmation Letter from the IRS, you can open an LLC bank account for your new company.
We recommend reading how are LLCs taxed and then speaking with an accountant. While most people will file their taxes in a similar fashion, it’s a good idea to speak with a professional to make sure everything is taken care of properly.
Places to update
Now that you have your new LLC, you’ll want to update your business name.
Here are some places to make updates:
- your website
- marketing and advertising
- business license and/or permit (you may need to re-apply)
- business checks
- business cards