QUESTION
Do I have to Keep My EIN if I bought a Franchise and changing address?
Asked on Jan 24th, 2013 on Business Law - Ohio
More details to this question:
I want to close my small business and open up a franchise, do I have to keep the current EIN, I just called the IRS and they were nasty to me. They said I have to keep the EIN and send in a Letter to change name and the address. Told them I want no more of this company. I am a sole member in a LLC. And will be Sole member in the franchise I just bought.
1 ANSWER
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Assuming that your original business was a corporation or LLC (you say that you are the sole member in a LLC, but don't say whether that LLC is the one that you want to close), it has its own tax payer ID, separate from your social security number. If you are planning to have the original company own the franchise, then you will keep the same ID. Unless there is some good reason to do that, I can't imagine one based on your comment that you, "want no more of this company." It sounds like you should just form a new company and hold the corporation in that company. You can be the sole shareholder of more than one company and, if they are a separate entity like a corporation or LLC, each SHOULD have its own EIN number.
Filing new corporate or LLC papers with the state is easy to do. Some lawyers charge a few to several hundred dollars to prepare and file ALL of the paperwork. Often, that is money well spent as they should help you choose which type of entity will be the most beneficial for you (some have different tax advantages depending on the type of business) and will prepare the remaining documents with you. Some may also help you choose whether you should select Sub-S treatment for a corporation, although that is often best left to your accountant to work through your financial projections as there will be different tax treatments which could be beneficial or detrimental depending on your start up and growth expectations.
Answered on Feb 15th, 2013 at 4:25 PM