There are a few adjustments that must be performed when a single member LLC seeks to expand and become a multi-member LLC. Whether the LLC requires a new EIN (Employer Identification Number) is one of the most frequent queries that come up during this procedure.
Generally speaking, an additional EIN is not required. This is so even though there are now several members because the LLC is still regarded as the same business for tax purposes. When an LLC becomes a multi-member LLC, it must be taxed as a partnership if it was previously treated as a sole proprietorship.
You might not need to get a new EIN if you are adding a new business to your current LLC. In many instances, the new company can be attached to the current LLC as a trade name or “doing business as” (DBA). To ensure compliance, it is vital to check with your state’s Secretary of State office as this may differ per state.
There are advantages and disadvantages to both an LLC and a sole proprietorship. A sole proprietorship is easier to establish up and less expensive, but the owner is solely responsible for any debts or legal actions incurred by the business. An LLC offers its members limited liability protection, but it can be more difficult and expensive to set up.
Finally, you must inform the IRS if you need to change the business name listed on your EIN. You can accomplish this by including the revised business name on Form SS-4 (Application for Employer Identification Number). A copy of the LLC’s updated Articles of Organization may be among the extra records that the IRS occasionally requests.
In conclusion, switching from a single member LLC to a multi-member LLC typically does not require a new EIN. However, it is crucial to guarantee accurate tax classification and adherence to state laws. A new EIN may not be necessary to add a new business to an existing LLC, and the IRS-approved paperwork can be used to change the business name listed on an EIN. Think carefully about the advantages and disadvantages of each option before deciding between an LLC and a sole proprietorship.
Yes, under a single EIN (Employer Identification Number), you may have several DBAs. If you run several companies or brands under a single LLC or company, this can be useful. Each DBA should, however, be registered with the proper municipal and state authorities.