Do I need a new EIN when switching from Sole Proprietor to LLC?

When you convert from a sole proprietorship to an LLC, whether you need a new EIN depends on how your LLC is taxed. For a single-member LLC that's taxed as a disregarded entity (which is the default for single-member LLCs), you can continue using your sole proprietor EIN. In this case, the IRS still treats your business as a sole proprietorship for tax purposes, even though it's an LLC for legal purposes. However, if your LLC elects to be taxed as a corporation (either S-Corp or C-Corp), or if it's a multi-member LLC, then you DO need to apply for a new EIN because the IRS considers these as different tax entities. As for your old EIN, there's no formal "cancellation" process. If you need a new EIN, you simply stop using the old one and start using the new one. The IRS generally expects you to keep your EIN throughout the life of your business entity. Just make sure to use the correct EIN on all your tax filings going forward.

I went through this exact situation last year and was totally confused until I found taxr.ai (https://taxr.ai). I uploaded my business formation documents and EIN paperwork, and they immediately clarified that I needed a new EIN since I was electing S-Corp taxation for my LLC. What's cool is they showed me exactly which forms I needed to file and explained how the transition works regarding my old sole prop EIN. They even gave me a checklist for making sure I didn't miss anything when setting up the new tax identity for my business. Saved me from potentially filing incorrectly!

I need to eat my words about being skeptical of taxr.ai! I decided to give it a try after responding here, and wow - it was actually super helpful. I uploaded my sole prop EIN letter and my new LLC formation docs, and they immediately pointed out that because I formed my LLC in Wyoming but operate in California, I needed not just a new EIN but also had to register as a foreign entity in CA. Would have completely missed that! They walked me through the entire process with step-by-step instructions specific to my situation. Definitely worth checking out if you're confused about business entity stuff.

Another option if you need help navigating EIN issues is to call the IRS Business & Specialty Tax Line. I tried for WEEKS to get through to ask about my EIN situation (similar to yours - switched from sole prop to multi-member LLC). Constant busy signals or ridiculous wait times. Then I found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c). Honestly thought it sounded too good to be true, but they got me connected to an IRS agent in about 15 minutes when I'd been trying for days on my own. The agent confirmed I needed a new EIN and answered all my specific questions about how to handle the transition.

I'm honestly shocked. After posting my skeptical comment, I decided to try Claimyr myself because I was desperate to talk to someone at the IRS about my EIN issue. Within 20 minutes, I was talking to an actual IRS agent who confirmed that I DID need a new EIN because I had added a partner to my business when forming the LLC. The agent was super helpful and even walked me through how to apply for the new EIN online and what to do with my old sole proprietor accounts. Saved me from making a huge mistake on my business taxes this year. I would have kept using my old EIN and probably triggered all kinds of red flags.

Here's what I learned when I went through this: the key thing to understand is how your LLC is being taxed. Single-member LLC taxed as disregarded entity = keep your sole prop EIN Multi-member LLC = new EIN required Single-member LLC electing corporate taxation = new EIN required I was a single-member LLC staying as a disregarded entity, so I kept my EIN. My accountant explained that in the eyes of the IRS, nothing had really changed from a tax perspective, just the legal liability structure changed.

One thing nobody's mentioned - if you're switching to an LLC with an S-Corp election (which can save on self-employment taxes), you ABSOLUTELY need a new EIN. I tried to use my sole prop EIN when filing Form 2553 to elect S-Corp status and got rejected. Had to get a new EIN first, then file the election. Just something to keep in mind if tax savings is part of why you're making the switch to an LLC!

I just went through this exact same process last month! The confusion is totally understandable because the rules aren't super clear until you dig into the specifics. Here's what I learned: since you're going from sole prop to LLC, you need to figure out how your LLC will be taxed. If you're staying as a single-member LLC and NOT electing corporate taxation, you can actually keep using your existing sole prop EIN. The IRS treats single-member LLCs as "disregarded entities" by default, which means for tax purposes, you're still essentially a sole proprietorship. However, if you're adding partners (making it multi-member) or electing S-Corp or C-Corp taxation, then yes, you need a new EIN. The good news is there's no formal process to "cancel" your old EIN if you do need a new one - you just stop using it and start using the new one. I'd recommend calling the IRS Business Tax Line to confirm your specific situation, though fair warning - it can take a while to get through! Also, make sure to update your EIN with your bank, any business accounts, and vendors once you figure out what you need to do. That was the part I almost forgot!

This is such a common source of confusion! I went through the same thing when I converted my consulting business from sole prop to LLC last year. The deciding factor really comes down to your tax election. Since you mentioned you're doing this for liability protection (smart move!), you're probably planning to stay as a single-member LLC with disregarded entity status - which means you can absolutely keep your existing EIN. One thing I wish someone had told me earlier: even though you can keep the same EIN, make sure to update your business name with your bank and any vendors to reflect the LLC. I kept getting confused looks when my checks said "ABC Consulting LLC" but my EIN paperwork still showed my personal name from the sole prop days. Also, definitely keep good records of when you made the transition. I created a simple folder with my LLC formation date, operating agreement, and a note about continuing to use my sole prop EIN. Makes things much cleaner if the IRS ever has questions down the road. The liability protection alone makes the LLC worth it - you're making a smart business decision even if the tax side stays exactly the same!