Transfer EIN to New Owner: Everything You Need to Know
To transfer EIN to new owner isn't possible. EINs, or Employer Identification Numbers, are not transferable from one business owner to another.3 min read
To transfer EIN to new owner isn't possible. EINs, or Employer Identification Numbers, are not transferable from one business owner to another. There are circumstances in which a business owner may need a new EIN, however.
Can I Transfer My EIN to a New Owner?
One of the most important steps a new business owner does is obtaining an EIN, or tax ID number. If you decide to sell your business, you might wonder if you can transfer your company's EIN to a new owner. The simple answer is no.
When there's a change in ownership, this usually requires an owner to obtain a new EIN.
When a New EIN Is Required
Most companies will have the same EIN for as long as they're in operation. However, there are a few circumstances when this isn't the case.
The IRS has a few requirements for existing businesses to apply for a new EIN, such as the following:
- Structure change
- Ownership change
- Corporations with a new charter
- Sole proprietors going through bankruptcy proceedings
- A subsidiary of a corporation
- Statutory merger leading to a new corporation
When you think about how to transfer a company's ownership, consider that the new owner will need a new EIN.
When You Don't Need a New EIN
Some business changes don't require a new EIN, such as the following:
- Change of location
- Adding locations
- Business name change
- Corporate merger, with the surviving corporation using the existing EIN
Also, if a corporation elects S corporation status, it doesn't need a new EIN. Moreover, partnerships and corporations undergoing bankruptcy proceedings don't need new EINs. There are other situations that don't call for a need for a new EIN.
What Happens When an Owner Dies?
In most instances, when a company changes hands, the new owner has to apply for a new EIN. In the event of a business owner's death, things may be more complicated, depending on the entity type. Several factors come into play when an owner dies and a new one comes in.
For corporations, ownership changes don't always require a new EIN. Corporations remain in perpetuity if an owner dies, as long as a succession plan is in place. In this case, no new EIN is required.
However, if you inherit a company as a sole proprietor, you will need to apply for a new EIN. When an owner of an LLC or partnership dies, this usually dissolves the business. Any restructuring of the company requires a new EIN.
Ultimately, the business type and structure determine if a new business owner must apply for a new tax ID number.
Applying for a New EIN
If you need a new EIN due to an ownership change, you want to obtain the number as quickly as possible. You can usually apply online and have your number within a few hours, at most. If you face a more complicated situation, you may have to apply via a mail-in form. It could take days or weeks for the IRS to process it.
Once you have your number, you can continue structuring the business under your new ownership. While you wait on the IRS to issue you a number, you can take care of some of your business paperwork.
You'll have to alert financial institutions, banks, and lenders that you do business with of this change. You may have to review current contracts to see if you have to amend the EIN. In certain instances, you may need to refile your licenses and permits under your new EIN.
Business Name Changes
If you've changed your business name, you must inform the IRS so that your EIN can transfer over to the new name. If you make a major change to your business — such as bringing in a new partner — or you sell the business, the EIN can't simply change hands.
The following are eligible to transfer their EIN to a new business name, if they've only changed their name:
- Corporate entities
- Sole proprietorships
EINs are very much like Social Security Numbers for businesses. As such, it's not possible to give them to someone else. Your situation will determine if you must apply for a new EIN or if you can continue using the same number.
If you need help with transferring an EIN, you can post your legal need on Upcounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.