Getting an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) is one of the initial steps when beginning a new firm. A company entity is identified for tax purposes by an EIN, a special nine-digit number. You might be asking whether you need to register for a new EIN if you intend to change the legal structure of your company, such as going from a sole proprietorship to a Limited Liability Company (LLC). The solution is not always obvious, so let’s get into the specifics.
A new EIN will typically be required if you are a sole proprietor and intend to create an LLC. The reason for this is because an LLC needs a new tax identification number because it is a different legal entity from its owner. There are a few exceptions, though. You might be permitted to use your current EIN if you are the LLC’s sole owner and have been conducting business under your personal Social Security number. Similar to this, you can utilize your current EIN if your partnership becomes an LLC.
Let’s go on to the following query now: Can I modify the name of my company on my EIN? Yes, but you’ll have to let the IRS know about the change. You can do this by filling out Form SS-4 and marking the “Name change” checkbox in section 9a. Also required is a copy of the legal document, such as your articles of organization or a court order, that altered the name of your company. Remember that changing your company name on your EIN does not necessarily update it on your registration with the state.
Can I modify my business type in relation to this? You can modify the type of your firm, however it relies on the change. You must apply for a new EIN if your company structure is changing, such as going from a sole proprietorship to an LLC. You might not require a new EIN if you are switching your business type within the same structure, such as from a general partnership to a limited partnership. However, to make sure you are adhering to all applicable laws, it is always a good idea to speak with a tax expert.
And last, what are the drawbacks having a DBA? DBAs, or “Doing Business As,” are made-up names that companies employ in place of their legal names. A DBA has the drawback that it offers no legal protection for your company name. Even if another company already uses the name, they can still apply for a trademark and bar you from using it. A DBA also does not establish a distinct legal company, thus any debts or legal problems that develop place the business owner entirely responsible.
In conclusion, it depends on your particular circumstances if you need a new EIN for your LLC. It is always important to seek advice from a tax expert if you are unsure to make sure you are carrying out the correct steps. Keep in mind that altering your company’s name or type necessitates contacting the IRS and, in some cases, acquiring a new EIN. And third, while though using a DBA to do business may be practical, it does not offer the same level of legal protection as creating an LLC or another type of legal corporation.
An LLC may indeed own another LLC. When the parent LLC holds a controlling interest in the subsidiary LLC, this is referred to as a parent-subsidiary relationship. The operating agreement of the parent LLC would then apply to the subsidiary LLC. Before adopting this structure, it is crucial to remember that holding many LLCs might make tax and legal requirements more difficult, thus it is vital to speak with an attorney or accountant.
The answer is that two companies may use the same DBA (Doing Business As) name. It is crucial to remember that a DBA name is not a legitimate business name and does not grant exclusivity or any kind of legal protection. Customers may become confused if two businesses use the same DBA name, which could also result in legal problems. It is advised that businesses carry out a comprehensive search before deciding on a DBA name to make sure it is not already being used by another company in their sector or region.