Corporation to LLC Conversion and the IRS

Businesses often convert from a Corporation to a Limited Liability Company (LLC) or vice versa. Although the process can be as simple as filing a Certificate of Conversion and paying the appropriate fee(s) to the state, many times it will be necessary to re-apply with the IRS and obtain a new Employer Identification Number (EIN).

For example, if the newly converted LLC has more than one owner, you will be required to obtain a new EIN. Additionally, if the newly converted LLC is owned by one individual and has chosen to be taxed as a corporation or an S corporation, or has an excise tax filing requirement for tax periods beginning on or after January 1, 2008 or an employment tax filing requirement for wages paid on or after January 1, 2009, it will be required to obtain a new EIN.

Keep in mind, however, there are certain scenarios where obtaining a new EIN is not necessary. For example, it is not necessary to re-apply for an EIN if the newly converted LLC reports income tax as a division of a corporation or other entity, including a single-member who does not choose to be taxed as a corporation or S corporation, and has no employees or excise tax liability. Also, an LLC classified as a partnership, or merely changing the name of an LLC or its location, does not require you to re-apply for an EIN.

For LLC’s converting to Corporations, you must obtain a new EIN if after the conversion you become a subsidiary of a corporation, or if a new corporation is formed due to a merger. On the other hand, if you are a division of a corporation, or if after a corporate merger the existing corporation continues to use the same EIN, it is not necessary to apply for a new EIN. Moreover, corporations that declare bankruptcy, change their name or its location, or choose to be taxed as an S corporation, do not need to re-apply for an EIN.

Regardless, some businesses may still choose to request an EIN for banking purposes, but not to satisfy federal tax requirements. For more information on obtaining an EIN, you should contact Florida Division of Corporations or the Internal Revenue Service.

If you need to convert a company from an LLC to a corporation, or vice versa, in Miami-Dade, Broward, Monroe, Collier or Lee County Florida, schedule a consultation with the experienced attorneys at EPGDLaw today, located in beautiful Coral Gables. Call us at (786) 837-6787 or e-mail us to schedule a consultation.

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