Change of Business Structure
Change of Business Structure because of a change in business need like a need for more or different business liability or growth in your business.
If you want to change the structure for your sole proprietorship to another business type, you will need to register your business with your state. You will need to close out business accounts and any contracts may need to be changed. Business registrations are regulated by state business divisions. Register with the IRS to apply for an updated Employer Identification Number (EIN) (you will need that to file your taxes and pay your employees) Register your new business structure with the state. Reapply for state licensure. Update your bank accounts and records to reflect your new business.
If you already have an Employer Identification Number (EIN), you may need to get a new one if either the organization, ownership, or if you have a Change of Business Structure. If you incorporate a sole proprietorship or form a partnership, you must get a new EIN. However, do not apply for a new EIN if:
Change of Structure:
- You change only the name of your business
- A partnership or corporation declares bankruptcy
- A corporation chooses to be taxed as an S corporation
- You elected on Form 8832 Entity Classification Election, to change the way the entity is taxed, or
- You change the location or add locations
- You elect to be taxed as an S corporation.
The above list is not all-inclusive for a Change of Business Structure. To find out when you should not apply for a new EIN, contact Tax Preparation Pro
Note: If you are electing to be an S corporation, be sure to file Form 2553, Election by a Small Business Corporation.