Do I Need a New EIN If I Move as a Sole Proprietor to a Different State?
When you move your business, there is a lot to think about. You want to make sure you are in compliance with federal and state regulations, so that when tax season comes around, you are properly prepared, organized and have everything in order. Fortunately, for a sole proprietor, moving to a different state is usually not a complicated process when it comes to your EIN. Here are a few things to consider before moving to another state.
Will You Pay New State Taxes?
Your EIN is used by the IRS for federal tax purposes. Therefore, relocation usually does not affect your EIN if you are sole proprietor who moves their business to another state in the United States. You might have to pay certain state taxes that are specific to your new state, however. It is important to establish your business in a new state by contacting its Revenue Department so that you can pay the taxes that the new state requires.
An EIN identifies your business distinctly from others and identifies it as a legal entity. Under certain circumstances, you might be required to obtain a new EIN as a sole proprietor moving to a new state. Although usually only one EIN is necessary no matter what state you move to, there are two instances in which a new EIN is required:
- If you create a Limited Liability Company (LLC) in a new state
- If you plan on starting a new, separate business in a new state
Because an EIN is a federal tax code for business entities, a new EIN is generally not required when a sole proprietor is moving to another state. The business owner should be prepared for possible state-specific taxes, however, and make sure the business is established appropriately regarding the new state’s regulations. Additionally, though not as common, a sole proprietor may need a new EIN in specific situations.
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