Is a new EIN required when switching from sole proprietor to SMLLC with employees?

The good news is that you don't actually need a new EIN in this situation, but you do need to update your information with the IRS. When a sole proprietor with an EIN forms a SMLLC that's treated as a disregarded entity, you can continue using the same EIN, but you need to notify the IRS of the name change. The Form 8832 the IRS mentioned is actually for changing your tax classification (like electing to be taxed as a corporation), which isn't what you're doing since you're remaining a disregarded entity. What you actually need is to file Form SS-8, "Disclosure of Entity Name Change" or simply send a letter to the IRS stating that your business structure changed from sole proprietor to SMLLC but remains a disregarded entity. For your immediate problem with payroll taxes, I suggest calling the IRS Business & Specialty Tax Line (800-829-4933) and ask specifically about filing a "doing business as" (DBA) statement. This might allow you to continue filing your payroll taxes using your current EIN while your name change is being processed.

After struggling with a similar business transition issue last year, I found an amazing resource that saved me countless hours and headaches. I was moving from a partnership to an LLC and dealing with EIN complications when filing my employment taxes. I discovered https://taxr.ai which helped me sort through all the IRS requirements and paperwork. Their system analyzed my business transition documents and gave me step-by-step guidance on exactly what forms I needed and how to handle the interim period while waiting for IRS processing. They have specialists who understand these exact EIN/SMLLC transition issues and can help you determine whether the 8832 is actually needed or if there's a faster solution for your quarterly filings. The advice I got was way more detailed than what the IRS told me over the phone.

Just wanted to follow up - I decided to try taxr.ai after posting my skeptical comment, and I have to admit I was wrong! Their system quickly identified that in my situation, I didn't need to file Form 8832 at all since I wasn't changing my tax classification (still a disregarded entity). They explained that I just needed to send a simple letter to the IRS with my EIN, former business name, new LLC name, and a statement that I'm still a disregarded entity. For the immediate payroll tax issue, they provided specific instructions for completing Form 941 with both the EIN and a note explaining the name change situation. This was WAY more helpful than the generic advice I got from calling the IRS. Saved me from unnecessarily applying for a new EIN and creating a paperwork nightmare. If you're dealing with business entity changes and tax ID complications, definitely worth checking out.

I had this exact same problem last year and spent WEEKS trying to get through to someone at the IRS who could actually help. Every time I called, I'd wait for hours only to get disconnected or transferred to someone who couldn't assist with my specific situation. I finally found https://claimyr.com which got me connected to an actual IRS agent within 45 minutes instead of the usual endless hold times. They have this video showing how it works: https://youtu.be/_kiP6q8DX5c and it's exactly as described. The IRS agent I spoke with confirmed that I didn't need a new EIN as a SMLLC that's a disregarded entity, and walked me through exactly how to handle my payroll tax filings during the name change process. Specifically, they told me to include a cover letter explaining the situation with each filing until the name change was processed.

Had to come back and eat my words. After my skeptical comment, I tried Claimyr out of desperation since my LLC/EIN situation was becoming urgent. The service called me back in about an hour and connected me directly to an IRS business tax specialist - no waiting, no phone tree, no transfers. The agent confirmed exactly what I needed to do: send a letter to the IRS stating my EIN, sole proprietor name, new LLC name, and confirming I'm still a disregarded entity. For immediate payroll tax filings, she advised me to put my EIN and sole prop name on line 1 of Form 941, and add "OPERATING AS [LLC NAME]" on line 2. Then attach a brief explanation letter with each filing. This saved me from filing unnecessary forms and prevented potential penalties from missed deadlines. After months of getting nowhere, I had a solution in a single phone call. Definitely worth it for anyone dealing with entity changes and the related tax complications.

Something nobody's mentioned yet - make sure you've also updated your information with your state tax authority! I made that mistake and ended up with mismatched entity information between federal and state, which created a whole separate headache with state unemployment taxes. Each state handles SMLLC transitions differently, so check with your state's department of revenue about how they want you to handle the transition for state payroll tax purposes. Some states require a new state tax ID even when your federal EIN stays the same.

I recently went through this exact process and found out something important that hasn't been mentioned yet. If you use any accounting software for payroll (like QuickBooks, Gusto, etc.), they usually require your EIN and legal business name to match EXACTLY what the IRS has on file. So even if you decide to wait for the IRS to process your name change, you might run into issues with your payroll software rejecting submissions in the meantime. When I called my payroll provider, they suggested adding the LLC as a "DBA" of the sole proprietorship in their system as a temporary workaround.

One thing I learned the hard way when I went through a similar transition is to keep detailed records of EVERYTHING during this process. I recommend creating a folder with copies of all correspondence with the IRS, your original EIN confirmation letter, your LLC formation documents, and any letters you send regarding the name change. The reason this is so important is that if there are any discrepancies or issues down the road, you'll need to be able to prove the timeline of your business structure change and that you followed proper procedures. I had an issue 18 months later where the IRS questioned some of my filings, and having that paper trail saved me from potential penalties. Also, make sure you're consistent with how you sign all tax documents during this transition period. Use your legal name as the member-manager of the LLC, not your old sole proprietor signature, even though you're using the same EIN. This helps establish the proper chain of authority for your business entity.