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Account Change

Question: 
We have a sole proprietorship account opened with the customer’s social security number. The customer wants to change it to an LLC account, do we need to required them to provide a TIN or EIN?
Answer: 

Answer by John Burnett:If the entity is a single-member LLC that has elected to be disregarded by the IRS as an entity (the member elects to have the income and expenses of the LLC reported on his/her tax returns), the LLC can use its single member's TIN (in your case, the Social Security number of the single member). Be aware that the LLC will not be eligible to hold a NOW account, regardless of which TIN it uses.

Answer: 

Answer by Ken Golliher:Your customer created the LLC in order to shield himself from personal liability. You help him achieve that goal when you tell him to open a new account in the name of the LLC and have him write a check to the LLC to close the sole proprietorship account.

Your bank would not let me transfer my checking account to John just by asking you to file maintenance the account title. The LLC, corporation, etc., is a new customer and everyone is better off if you treat it that way.

First published on BankersOnline.com 3/01/10

First published on 03/01/2010

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