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posted Nov 15, 2021 9:43:09 AM

LLC change from sole proprietor to partnership

I have an EIN number for an LLC that is currentlly taxed as a sole proprietorship.   I want to change the LLC to a partnership with my son.  Do  I need a new EIN number ?  How do i notify the IRS of the change?

0 2 465
2 Replies
Level 15
Nov 15, 2021 10:02:33 AM

yes you do. file a new SS-4

box 10

Changed type of organization. Check this box if the business is changing its type of organization. (including available space immediately below) the type of change made. "From sole propreitorship (LLC) to partnership (LLC)".

box 18 is "no" since the partnership has never applied for an EIN before.

 

Level 13
Nov 15, 2021 11:23:18 AM

In addition to @Mike9241 response to your direct question, keep in mind that there are many other items and issues that need to be addressed:

  • organize under your state law
  • prepare articles of organization
  • prepare LLC operating agreement
  • will you have a part-year return
  • will the new entity actually be a partnership or a multi-member LLC taxed as a partnership
  • you will need to understand Revenue Ruling 99-5 impact on your entity change (assumes the new entity is also an LLC)
  • the above is not an all-inclusive list

It is probably a good idea to have a one on one with a tax professional to discuss the new entity structure, how it works, what you can and can't do, etc.  Best to start off on the right path.