Your EIN Mistake Could Cost You $50,000

(And Your Business)

Author

Amanda Beale
August 02, 2025

Hey ,

I see entrepreneurs making the same EIN mistake every single week: they change their business structure but keep using their old EIN.

You started as a sole proprietor, got an EIN, then formed an LLC but you're still using that original EIN for your new LLC. Or you had a partnership that dissolved, but you're still using the partnership EIN for your solo business.

This isn't just a paperwork mix-up. It's tax fraud in the IRS's eyes.

⚠️ What’s Non-Compliant

Using an EIN that doesn't match your current business structure violates IRS regulations and can trigger penalties up to $50,000.

Common violations I see:

  • Started sole proprietor → formed LLC → still using sole proprietor EIN

  • Had business partner → partner left → still using partnership EIN

  • Dissolved corporation → started new LLC → using old corporation EIN

  • Single-member LLC → added partner → didn't get new EIN for multi-member structure

The IRS treats each tax return filed with the wrong EIN as a separate violation.

✅ Compliance Tip

Your EIN must match your current legal business structure. When your structure changes, you need a new EIN.

🛠️ Action Steps: Fix It Now

  • ✅Find your EIN confirmation letter from the IRS.

  • ✅Check what business structure is listed on that letter.

  • ✅Compare it to your current legal structure (LLC, Corp, Partnership, etc).

If they don’t match:

  • ✅Call 1-800-829-4933 and speak to an IRS representative or apply for a new EIN immediately.

  • ✅Update your business bank account with the correct EIN.

  • ✅Notify your accountant and payment processors.

📌 Disclaimer

The information provided in this newsletter is for general informational purposes only and does not constitute legal, tax, or financial advice. While every effort is made to ensure accuracy, laws and regulations change, and individual circumstances vary. For advice specific to your business, please consult a qualified professional.

When in doubt, consult a licensed attorney to review your compliance needs.
If you don’t have one, I’m happy to help you get connected, just schedule a quick call.

Thank you for reading.

Keep showing up, protect the business that you are building and share what you learned with a friend !

Until next time💛