You might be wondering if you need to get a new employer identification number (EIN) if you’re thinking of changing the legal structure of your company to a S corporation. An EIN is a special nine-digit number given to your firm by the IRS to be used for tax purposes. You do not require a new EIN when switching to a S corporation, to put it briefly. There are, however, a few crucial things to remember.
You are not forming a new entity when you convert your company to a S corporation; rather, you are altering its tax classification. You won’t be required to get a new EIN; your company will keep its current one. In fact, even if a business changes its ownership or structure, the IRS advises keeping the same EIN throughout its lifespan.
However, there are specific circumstances in which switching to a S corporation may necessitate getting a new EIN. For instance, if you were a sole proprietor before and are now forming a S corporation, you will want a new EIN since you are establishing a new business. A new EIN must be obtained since a partnership is ending and a new entity is being formed if you were previously functioning as a partnership and are now incorporating a S corporation.
When switching from an LLC to a corporation, people also inquire as to whether they require a new EIN. In most cases, the answer is yes. You must obtain a new EIN since you are forming a new entity when you change from an LLC to a corporation. However, you might be able to keep the same EIN if your LLC is taxed as a partnership and you are changing to a S corporation.
You must first create a corporation by filing articles of incorporation with the state where you intend to conduct business in order to convert to a S corporation. Following the formation of your organization, you can file Form 2553 with the IRS to choose S corporation status. To be eligible for S corporation status, you must fulfill a number of standards, including those relating to the number of shareholders and the types of stock issued.
An LLC taxed as a S corporation may be owned by a S corporation. An LLC taxed as a S company may be owned by a S corporation, yes. This type of organization, known as a subsidiary or holding company, can offer significant liability defense and tax advantages.
Is it possible to tax a single-member LLC as a S corporation? By submitting Form 2553 to the IRS, a single member LLC may decide to be taxed as a S corporation. But it’s crucial to remember that a single member LLC might not qualify for S corporation classification if it has several stock classes or members who aren’t persons or estates.
In conclusion, unless you are forming a new organization, you usually do not need to obtain a new EIN when changing to a S corporation. To make sure you are fulfilling all requirements for S company status and to ascertain whether acquiring a new EIN is essential in your particular circumstance, it is crucial to speak with a tax expert.