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Intuit

Changing your business entity

Learn how to change your business entity and how changing it can affect your business.

 

An entity change is a change in the structure of a business. This can affect legal protections, tax savings, and ownership requirements. We explain what you need to know about entity changes.

Non-entity changes

The following changes don't qualify as a major business change.

  • Business name change
  • EIN incorrectly entered by customer
  • Change of ownership while keeping same EIN

Entity changes

Any of the following changes qualifies as an entity change.

Business structure:

  • Sole proprietorship changing to a corporation.
  • Sole proprietor changing to a partnership.
  • Partnership changing to a corporation.
  • Partnership changing to a sole proprietor.
  • Corporation changing to another type of corporation (for example, S-Corp to C-Corp).
  • Formation of a limited liability corporation (LLC) or becoming incorporated.

Ownership changes:

  • Transfer of ownership with new EIN.
  • Merger and acquisition (purchase of another company).

What you need to know

Each entity change is different and has its own unique set of circumstances. And every employer can handle it differently. If your business is going through an entity change, contact us for assistance with updating the payroll account for the change.

Note: If you're using QuickBooks Online Payroll Enhanced and Core, you need to set up a new payroll account to separate the new EIN from the old one.

A new federal Employer Identification Number (EIN)

  • Employers are eligible to carry over wages from their old EIN to their new EIN.
  • Wages employees earned with the old business are applied to the wage base limits for Social Security and unemployment taxes for the new business.
  • This can reduce the new business's employment tax liabilities.
  • IRS Website: Do you need a new EIN?

Wage Carryover 

  • Intuit Online Payroll doesn't support wage carryover (successor/predecessor wages)
  • When you establish a new payroll account for your new entity, all taxes will be calculated "from scratch."
  • If your situation is eligible for wage carryover, you'll need to manually calculate your FUTA and SUI tax payments.
  • You'll need to file your FUTA and SUI forms outside of our system, for the remainder of the year in which the entity change took place.

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