Startups Stack Exchange Archive

Do I have to change LLC Name after buyout of other member?

posted by: montag on 2017-08-26
tagged: llc, sole-proprietorship, buy-out
score: 2

I own an LLC in Oklahoma. In 2016, I purchased the other member’s share/rights/interest per the rules defined in our Article of Organization.

I am now the only member (although I plan on hiring contractors in the near future). My accountant says I must file for a new EIN because 50% or more of the business membership has changed. I tend to agree with him on that point as this seems to be the case per the IRS.

He had also said that I have to change the name of the LLC since the previous LLC “dissolved” when I bought out my parter. Is this correct? I cannot find anyone saying this online.

I prefer not to change the name as I already own a website, business cards, posters, expensive logo, etc and already have a positive local reputation. I would not have bought his share and would have dissolved the company instead otherwise.

EDIT:

Here’s the source for why I believe I do in fact need a new EIN, but does not address my name change question:

Partnerships You will be required to obtain a new EIN if any of the following statements are true.

You incorporate.
Your partnership is taken over by one of the partners and is operated as a sole proprietorship.
You end an old partnership and begin a new one.

You will not be required to obtain a new EIN if any of the following statements are true.

The partnership declares bankruptcy.
The partnership name changes.
You change the location of the partnership or add other locations.
A new partnership is formed as a result of the termination of a partnership under IRC section 708(b)(1)(B).
50 percent or more of the ownership of the partnership (measured by interests in capital and profits) changes hands within a twelve-month period (terminated partnerships under Reg. 301.6109-1).

Source: https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-a-new-ein

Answer 13237

posted by: Denis de Bernardy on 2017-08-26
score: 2

He had also said that I have to change the name of the LLC since the previous LLC “dissolved” when I bought out my parter. Is this correct? I cannot find anyone saying this online.

For good reasons: it’s incorrect. For precisely the reason you spell out among others:

I prefer not to change the name as I already own a website, business cards, posters, expensive logo, etc and already have a positive local reputation. I would not have bought his share and would have dissolved the company instead otherwise.

The company did not “dissolve”, it changed hands. No name change or rebranding is necessary.

(If it was, you’d have problems all the time in publicly traded companies.)

My accountant says I must file for a new EIN because 50% or more of the business membership has changed.

Not 100% sure but intuitively this is also wrong for the very same reason. Your company did not dissolve. Its owners simply changed. Yet your accountant seems to be processing it as if it had been dissolved and recreated.

Double check though because I’m not US based.

And if that last point is correct, seriously consider getting a new accountant.

All content is licensed under CC BY-SA 3.0.