Your accountant should let you know when a business structure change is in your best interest. After the decision's made, it's time to spread the word and file appropriate paperwork.
If you recently worked with your accountant on switching up your company’s business structure and received documentation that the change has been approved, congratulations — you’re almost done!
There are situations where changing the legal structure of your business means that you have to change your company’s name. If you change an LLC to a corporation, for example, you will have to change the name to remove the “LLC” from the end of the name, adding “Inc.” This may mean ordering new signage, business cards and stationery.
At Kerby Accounting, we always remind clients that a new Employer ID Number (EIN) is needed. This must be requested from the IRS.
Then — depending on how you have restructured — you may no longer be allowed to mix personal and business funds and will need to open up a separate business banking account. You may also need a new Fictitious Name (DBA) statement, which our office can help you file.
If you’re a company that now sells products for which you charge sales tax, you’ll need to notify your state Department of Revenue. Any city and county taxing entities will also need to be notified, as well as agencies that handle business licensing or permitting matters.
Business permitting can involve businesses that buy wholesale items for resale, for example. If a company that has changed its structure renovates commercial spaces, building permits may need to be changed. Health permits required in the preparation of food may need to be changed, or zoning permits for where your business is located and what the business provides there.
Other entities that should be on your checklist to notify when your business structure changes are your bank, company vendors and insurance companies.
Business structure changes are an important part of ensuring your company is best represented to the IRS in ways most beneficial to you as your business grows and changes. For questions, or an assessment on what change might be best for you, Kerby Accounting & Business Solutions offers a free consultation.