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New Member
posted Mar 6, 2023 9:57:31 AM

1065 - Switched midyear from SMLLC to MMLLC

If a single member LLC becomes a multi-member LLC mid-year, but the EIN stayed the same, what is the "Date business started" on form 1065? Would "Initial return" be checked if the business had submitted a return as a SMLLC, just not the MMLLC yet?

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6 Replies
Level 15
Mar 6, 2023 10:13:18 AM

You must get a new EIN every time your LLC changes members. 

https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers

Expert Alumni
Mar 6, 2023 10:25:58 AM

First, the business structure changed and therefore a new EIN is required for the new entity, for tax purposes, if unincorporated, a partnership. Click here for the IRS reference.  

 

Next as a multimember LLC unincorporated you will file as a partnership using form 1065 and issuing K-1s to the partners to use on the individual returns.  

 

On the partnership return, the date started will be the date the new now partnership began.  The box indicating initial return will be checked. 

Level 15
Mar 6, 2023 1:12:16 PM

switch is a poor choice. what you did was form an MMLLC and contributed the assets and liabilities of your LLC to it. 

 

New Member
Mar 27, 2023 9:23:45 AM

And yet......

"Note. Any entity that has an EIN will retain that EIN even if its federal tax classification changes under Regulations section 301.7701-3. If a disregarded entity’s classification changes so that it becomes recognized as a partnership or association for federal tax purposes, and that entity had an EIN, then the entity must continue to use that EIN. If the entity did not already have its own EIN, then the entity must apply for an EIN and not use the identifying number of the single owner. A foreign entity that makes an election under Regulations section 301.7701-3(c) and (d) must also use its own taxpayer identifying number. See sections 6721 through 6724 for penalties that may apply for failure to supply taxpayer identifying numbers. If the entity electing to be classified using Form 8832 does not have an EIN, it must apply for one on Form SS-4, Application for Employer Identification Number. The entity must have received an EIN by the time Form 8832 is filed in order for the form to be processed. An election will not be accepted if the eligible entity does not provide an EIN. ▲ ! CAUTION Do not apply for a new EIN for an existing entity that is changing its classification if the entity already has an EIN."

https://www.irs.gov/pub/irs-pdf/f8832.pdf

"Taxpayers can fax the completed Form SS-4 application to the appropriate fax number (see Where to File Your Taxes (for Form SS-4)), after ensuring that the Form SS-4 contains all of the required information. If it is determined that the entity needs a new EIN, one will be assigned using the appropriate procedures for the entity type. If the taxpayer's fax number is provided, a fax will be sent back with the EIN within four (4) business days."


....It's been three weeks. So now I'm thinking I don't need a new EIN after all?? Maybe just Form 8832?? Which sucks because I already filed with "Applied for" in the EIN box, and now it looks like I didn't need to?

 

 

Level 15
Mar 27, 2023 9:26:32 AM

@SunFox22 

You didn't change your entity's classification.  That would apply if you changed sole proprietorship operating as a disregarded entity to a SMLLC, for example.

 

You formed a new entity. 

Level 13
Mar 27, 2023 10:31:47 AM

A number of comments on your question:

  • You should have notified the Secretary of State of the change in the business structure.
  • Since you are changing the structure from a SMLLC (disregarded entity by default) to a multi-member LLC (MMLLC)  the default treatment is a partnership for federal income tax purposes.
  • You need to read the link provided by @DMarkM1 and focus on the SMLLC section.  Based on the limited facts, you will need a new EIN.
  • You also need to make sure you have a revised operating agreement.
  • You need to make sure that this change in structure follows the guidelines of Revenue Ruling 99-5.
  • You don't need to file form 8832, as an eligible entity with two or more owners is by default classified as a partnership for federal income tax purposes; as noted above.
  • You should have been able to obtain an EIN online immediately.  At this point you will need to wait until you receive it from the IRS.  Hopefully you have extended to tax return.
  • Your start date is the date the MMLLC began business.
  • Your form 1065 is an initial return.