Last updated October 12, 2020

How to Change (Convert) Sole Proprietorship to LLC

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
Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.

Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

43 comments on “How to Change (Convert) Sole Proprietorship to LLC”

  1. Is it possible to retain my sole prop EIN when converting from a sole member LLC (with employees) to a single-member LLC? Based on the article, a sole proprietor with employees is not able to retain the EIN.

    • Hi Patrick, can you rephrase your question please? I don’t understand. A sole member LLC and a single-member LLC are the same thing.

  2. I received a new EIN for my single member LLC. I understand that I am basically closing one business and opening another. My question is “Is there any reporting I am going to have to do for the transfer of assets and liabilities from my sole proprietorship to the LLC?”

    • Hi Sheri, great question. You can enter language into your LLC’s Operating Agreement for assuming the liabilities, however, depending on what they are and who the debt is owed to, the debt holder may not agree to transfer the liabilities to the LLC. What kind of liabilities are you referring to? Regarding the transferring of assets, there are two common ways to do so. First is a straight sale using a Bill of Sale to document you selling the assets to the LLC. The second is that you can use the assets as your capital contribution to become a member of the LLC. In other words, you transfer your assets to the LLC (via the LLC Operating Agreement) and then you become an LLC Member. Under “IV. Capital Contributions” in the Operating Agreement, list your assets their current fair market value (and enter your % interest as “100%”). If you need more room, you can instead write “See Attachment 1”, then make a new document and lists all the assets. I also recommend speaking with an accountant in case there is any tax liability you can reduce. If the assets are vehicles or real estate (or any asset with a title), those assets will also need to be retitled to the LLC. Hope that helps.

  3. Hello. I’m changing my sole proprietor business to LLC. I have a registered DBA and EIN. I called NH State registry and they were no help at all :( I’m so confuse.
    I would like to know if I should discontinue my DBA first then file my LLC? I’m changing my DBA name a little bit (adding a new word) and I’m adding my husband as an owner. Any advice would be greatly appreciated.

    Thank you!

    • Hey Lyn, no, you don’t have to discontinue the DBA first before forming your LLC. Also, if you’re “adding your husband as owner”, then the more technical way to explain that is you and your husband are forming an LLC, which will be a Multi-Member LLC. So if I understand correctly, you’ll form an LLC with your husband, wait for it be approved, then get a new EIN for your LLC. Hope that helps.

  4. I registered my DBA in Texas in 2016, but have no earnings from it. Now, I want to form LLC and my question is should I apply for new EIN for LLC even if I didn’t use it for my sole proprietor business yet? Thank you for all the information on your website.

    • Hey Rubi, yes, you’ll want a new EIN for the LLC. Make sure you form your LLC in Texas, wait for it be approved, THEN get the new EIN. You should also cancel/close out your old DBA to keep your records organized. You’ll need to contact the county in which it’s registered for instructions. Hope that helps.

  5. I need to keep the EIN of a sole proprietorship to maintain health insurance contracts. If we go through the process as described to transfer the EIN to an LLC can the LLC file to be taxed as a corporation eventually?

    • Hi Bess, yes, I believe so, but I recommend calling the IRS to double-check. Thanks.

  6. Hello i just went from DBA sole proprietor to a single member LLC. I was wondering if as a single member LLC if i’m still taxed as a sole proprietorship do i still need a separate bank account? If so do i then need to start paying myself as an employee which means i would be taxed twice or can i use the business bank account for personal use?

    • Hi Adam, yes, by default, a Single-Member LLC is taxed as a Sole Proprietorship. Yes, the LLC needs a separate bank account. No, you shouldn’t pay for personal expenses from the bank account. Meaning, writing checks and/or charging the debit card for personal use. Instead, just withdrawal money from the business bank account (or transfer to your personal account) and then use from there. This would be an LLC distribution instead of paying personal expenses directly from the business account. No, you don’t need be an employee of the LLC. You can just take distributions any time you’d like. Hope that helps.

      • Thanks for this explanation. Does the same apply for a multi-member LLC? Can any member withdraw funds from the LLC bank account at any time? (transfer to personal account for personal expenses) How about deposits? How does money become associated with the LLC, as opposed to being personal money? What type of accounting is required for deposits and withdrawals?

        • Hi Amy, it depends on how the LLC Operating Agreement is drafted, but usually, yes, that’s how it’s set up as default. Meaning, most Member-managed LLCs give all Members access to the business bank account. When you capitalize the business bank account (make initial deposits) and document it, that’s how it becomes the LLC’s money. There is no specific type of books that are required for accounting, but having books, whether done in a spreadsheet or done with software is a good idea. If you want to form an LLC, but only have 1 Member retain control, you could setup a Manager-managed LLC where one person makes all management and financial decisions and the other Members take a passive role. We have more details here: member-managed LLC vs manager-managed LLC. Hope that helps.

  7. Hi, Matt. Thank you for this valuable guidance! I am stuck on whether to apply for new EIN. I have been working as in independent contractor (counseling) and have EIN and NPI (sole proprietor). I want to form an LLC and thought it would be less confusing to transfer the EIN, but I am wondering if I am missing out on any advantages I might have by getting a new EIN instead. Created LLC would be single-member. Am I missing something?

    Thanks again!

    • Hi Maria, you’re very welcome! There aren’t really pros and cons, it’s just more so if you’re currently using the EIN and there’s history you want to keep, you can transfer it to your LLC by sending a letter to the IRS. If you don’t need the EIN, it’ often cleaner from an organizational standpoint to get a new EIN. Hope that helps.

  8. Looking to open an LLC and transfer my EIN from my sole proprietorship which has a DBA, as described in your page above. Does the LLC name need to match my DBA name in order for my tranfer to be accepted by the IRS?

    • Hi David, great question. No, the DBA doesn’t need to match the LLC name. Hope that helps.

        • Hi David, you have an Assumed Name, you can cancel it by filing a Certificate of Discontinuance of Assumed Name. Then when you file your state taxes for your Sole Proprietorship, you can mark them final. Please check with an accountant on that last part though. Hope that helps.

  9. How do you pay loans you incurred as a sole proprietorship if you change to an lc? Currently we pay those from our business account but if we switch to the llc do we still pay from the business account?

    • If the LLC assumed those liabilities when you converted/changed over to an LLC, then you can pay them from the LLC’s business bank account. Hope that helps.

  10. Hello. I have a DBA and Ein number from NY state, monroe county aged 3 years. I would like to form a new LLC in North carolina state and transfer over the existing ein number from NY. Is this possible? If so, once the ein is transferred to the LLC can i add members later on or does it have to stay a single member LLC for the remainder of its existence.

    • Hi Ray, if you’re going to add Members, it would be best to get a new EIN for your new LLC. Hope that helps.

  11. Hi Matt,
    Thank you for all the great information. I am sole proprietor without a DBA and considering transferring to an LLC. Would I create new bookkeeping records (start fresh) for the LLC? Also, I understand from IRS website that 1099 forms have to be under a person, not a business, so would I have to keep my sole proprietor EIN for those and essentially have two sets of accounting books?

  12. I opened a sole prop under a dba, would i have to change the dba name or would it be transferred over when opening a llc?

    • Hi Nate, you can just operate under the LLC’s true name and cancel/withdraw the DBA name (attached to your Sole Proprietorship). However, that’s a general reply. Can you provide the name of the DBA and the new LLC (or a similar version of the names for privacy). There are a few ways to go about this, but it depends on what the current names are and what you’re trying to do. Thanks.

  13. I opened a LLC in October. On Jan 1 it went live. I now want to close my sole prop. How do I transfer the unpaid accounts receivables?

    • Hi Lisa, that would likely be through an assignment, but we recommend speaking with an attorney about the best way to draft that. Hope that helps.

  14. Hello,

    I am thinking about changing to an LLC. Right now I use a certain email address for my Sole Proprietorship.

    If I keep the same or a similar name for the LLC, do I have to stop using the old email address or can I use the same one?

    I would so appreciate your response!

    Thank you,

    • Hey S, no, you don’t have to stop using your old email address. You can continue to use that email address, or any email you’d like when operating your LLC. Hope that helps.

  15. Hi Matt,
    I have an existing sole proprietorship and I’m about to start another one in a completely different industry. Between the IRS and reddit, I believe I should be using the same EIN because they’re considered a “collected group”. I have a fictitious name I’d like to use for my new business. If all goes well, it may become an LLC. Could I keep the same DBA?

    • Hi Kathy, it depends on the state (or county) in which the Fictitious Name is filed. If allowed, it’s usually called an Assignment of Fictitious Name. In essence, you would transfer the right to use the Fictitious Name from yourself to your LLC. Hope that helps!

  16. Hi Nate, thank you for this – its informative. Im a little confused on business names, you mentioned “After your LLC is approved, simply stop using your Sole Proprietorship. You’ll only want to operate under your LLC moving forward.” – for example, if my business is AcmeData formed under a sole proprietorship (assuming this is the “dba”), could I use the same name with the addition of “LLC” when I change to an LLC? Such as AcmeData LLC? And what exactly would I be canceling? The dba of AcmeData?

    • Hi Vinnie, we totally understand. Switching from a Sole Proprietorship to an LLC can feel a bit “nebulous”. In your example, you can form an LLC called AcmeData LLC and begin operating under that LLC. You can also cancel/withdraw the DBA name if needed. However, if allowed in your state, you can instead transfer/assign the DBA of AcmeData from yourself to AcmeData LLC. Hope that helps.

  17. Concerning existing contracts and client agreements, is there a proper process to transferring them to be applicable to the LLC?

    • Hi KM, generally speaking, you can assign the contracts from yourself/Sole Proprietorship to your LLC via a simple assignment agreement. And then notify your clients that you are now operating as an LLC. You can also notify them that the agreements have been assigned to your LLC. However, that can’t be done if the contracts/agreement specifically state an assignment is not allowed or that it requires both parties to agree in writing. Of course that last one isn’t too bad though. Hope that helps.


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