Do I need a new EIN if I change from Sole Proprietor to LLC?

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Do I need a new EIN if I change from Sole Proprietor to LLC?

Yes, if you have an existing Sole Proprietorship with an EIN (with or without a DBA) and you want to change your Sole Proprietorship to an LLC, you will need a new EIN from the IRS.

Even though a Single-Member LLC is, by default, taxed like a Sole Proprietorship, the IRS looks at the Sole Proprietorship and the new LLC as two different “entities”… therefore they require that you get a new EIN for your LLC.

(related article: how will my LLC be taxed?)

There is some confusion about “transferring” the EIN associated with your Sole Proprietorship to your LLC. You’ll often get mixed answers depending on who you speak to at the IRS or what you read online.

However, even if you mail a letter to the IRS requesting that the EIN be transferred from you as a Sole Proprietor to your LLC, the IRS will mail you back a rejection letter.

If you look at the “Do You Need a New EIN” page on the IRS’s website, it says the following for Sole Proprietors:

Sole Proprietors

You will be required to obtain a new EIN if any of the following statements are true:

  • You are subject to a bankruptcy proceeding.
  • You incorporate.
  • You take in partners and operate as a partnership.
  • You purchase or inherit an existing business that you operate as a sole proprietorship.

You will not be required to obtain a new EIN if any of the following statements are true:

  • You change the name of your business.
  • You change your location and/or add other locations.
  • You operate multiple businesses.

We highlighted “You incorporate” since this is what the IRS considers you to be doing.

Note: We know this is a bit confusing since the verb “incorporate” means to create a Corporation, not an LLC. An LLC is “formed”, not “incorporated”.

So what should you do?

If you decide to form an LLC, wait for your LLC to be approved, then apply for a new EIN for your LLC.

Note: In a few states, you actually need to get your EIN before your LLC is filed (ex: Louisiana), however, in most states, you want to wait for your LLC to be approved before applying for your EIN. Check out our how to form an LLC page for instructions on all 50 states.

You don’t have to write “final return” on your Sole Proprietor Schedule C. You’ll just file a new Schedule C to report the LLC’s income for next tax year. If your Sole Proprietorship has a DBA, you can cancel/withdraw it after your close your Sole Proprietorship.

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.

6 Comments

  1. Julia Moreno January 5, 2019

    I want to use my DBA from my sole proprietorship as the name plus LLC on my new LLC. Do I have to cancel the DBA (how?) first so the name is available and then file my articles of Inc.? Or is there someway to transfer the name without waiting for the withdrawal to be effective?
    Thank you.

    reply
    • Matt Horwitz January 6, 2019

      Hi Julia, I don’t understand your question. Can you please rephrase it with more details. Thank you.

      reply
  2. peta January 20, 2019

    I just requested an EIN from the IRS as sole proprietor a week ago. However I changed my mind and want to make my business an LLC instead. Can I form and LLC and request a new EIN number without having to do anything else with the sole proprietor EIN or do I have to notify someone to cancel or convert it?

    reply
    • Matt Horwitz January 22, 2019

      Hi Peta, yes, you’re correct. You can just go ahead and form an LLC and get a new EIN. If you’d like, you can cancel the first EIN: cancel EIN with IRS. It’s optional though.

      reply
  3. Davis February 12, 2019

    Hello,

    Just so I’m clear on this…

    I acquired an EIN for my massage therapy practice a couple of years ago. I just got my LLC approval for the same business a couple of days ago. I have not changed anything. I am the sole member. I have no employees. I want to attach my existing EIN to my newly approved LLC.

    So, you’re saying it’s NOT possible to combine them and a new EIN is needed?

    reply
    • Matt Horwitz February 15, 2019

      Hi Davis, that is correct. The IRS wants you to get a new EIN for your newly-formed LLC.

      reply

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