The LLC I have was initially started with a friend. Naturally, sometimes things change, and my friend decided to leave the LLC in order to pursue other business opportunities with his family. Thankfully we parted on good terms and our friendship remains fully intact.
The only issue is that the LLC was filed as a Partnership when we applied for an EIN (Employer Identification Number), and that’s no longer the case. At this point I could’ve changed my LLC into a sole proprietorship but 1) that would require me to get a new EIN and 2) I already went through all the trouble of setting up an LLC in the first place, so I had to figure out how to update my EIN to show that I was now a single member LLC.
Side note: Arizona allows single member LLC’s but I’m not sure if this is true for every state, so check with your local corporation commission to see if that’s an option before you remove all members from your LLC. Also, there may be additional steps involved to remove/change a Statutory Agent if he/she is one of the members leaving the LLC.
(Take a deep breath…) I would think that it’s commonplace for LLC’s to go from multi-member partnerships to single member run and thus the IRS website would have instructions on how to update your EIN to reflect this change, yet I guess it’s not commonplace enough because there’s no such info to be found. (Now exhale) After spending an hour on the phone (I called 800.829.4933 option 1) trying to figure out what to do, I was shown the way by an IRS agent who I could only guess was a drill sergeant at one point in her life by the intonation in her voice. Here’s the information I was given:
To change your EIN status from a Partnership to a Single Member LLC, you must write or FAX a letter to the IRS facility where you originally filed your EIN and include the following…
- Include the legal name of the LLC.
- Include your position in the LLC. (Here I just stated Statutory Agent & Single Member)
- Include the address of your LLC.
- Include a copy(s) of your Articles of Amendment with the change(s) to your LLC.
- Include an explanation that you went from a multi-member LLC to a single member LLC and you are the only member in the LLC now.
- And address the coversheet (FAX) and/or letter to “Attention: EIN Operation”
- By the way, I’ve shared the letter I sent to the IRS in the comments below &mdash click here to see it.
I was also told that it’s better to FAX the letter and documents instead of mailing them since it will take an average of 4 days via FAX versus 2 weeks via snail mail to process. This is the address and the corresponding FAX for the location that I originally received my EIN from:
Department of the Treasury
Internal Revenue Service
Philadelphia, PA 19255
FAX Number: 859.669.5760
Call 800.829.4933 option 1 if you’re unsure of what address or FAX number to use, it should be on the letter that the IRS sent you when they assigned your EIN.
FYI: In this scenario, you will be taxed as if you were a sole proprietorship, yet you will still have the legal benefits of a Limited Liability Corporation.
Well I hope this information might be useful if you’re in a similar situation, and although it’s been a while since I filed for an LLC, feel free to leave a comment with any questions you may have!
The Closet Entrepreneur