Hi, new expert here - allow me to assist.
what happens when you change the owner of the business from an individual to an Entity. For example, if I file for an FEIN and make the owner John Doe and then at a later point would like to make the responsible party ( owner ) an entity, such as XYZ Inc., how do I go about changing the owner? What are the steps? Does this require a change in busness structure? Or does the IRS simply treat this as a sale of business?
Generally, businesses need a new EIN (employer identification number) when their ownership or structure has changed. Although changing the name of your business does not require you to obtain a new EIN.
If you change from a sole proprietorship to a corporation - you need to get a new EIN.
If you change from a sole proprietorship to a partnership
- you need to get a new EIN.
If you operate as a sole proprietorship and change the company name (but don't incorporate or form a partnership) - YOU DO NOT need to get a new EIN.
If you form a partnership - then change to a corporation - you need to get a new EIN.
To obtain an EIN or get a new EIN - here is a link where you can do that on line:
Now as to your other questions:
For example, if I file for an FEIN and make the owner John Doe and then at a later point would like to make the responsible party ( owner ) an entity, such as XYZ Inc., how do I go about changing the owner?
For a sole proprietor
to form a corporation - it's very simple.
The first choice you would make is in what state to form the corporation.
If you want to form the corporation in the state of Washington - here is a link to a step-by-step guide:
Does this require a change in busness structure?
I'm not exactly sure of your question here - but yes the change of business form would require a new EIN.
Forming a corporation is a change of business structure and, as per the above link, it's easy to form a corporation in Washington.
Or does the IRS simply treat this as a sale of business?
No, they would classify this as a change in business form - therefore you would need a new EIN number.
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