California Tax Service Center

Changes in Business

If you are changing your business structure, changing ownership, or changing an address, the information below may be useful to you.

Federal Income Tax (Internal Revenue Service)

If you already have a federal employer identification number (FEIN), you may need to get a new one if either the entity type or ownership of your business changes. If you incorporate a sole proprietorship or form a partnership, you must get a new FEIN. However, do not apply for a new FEIN if:

  • You change only the name of your business
  • You elect to change the way the entity is taxed on Form 8832 (Entity Classification Election), or
  • A partnership terminates because at least 50% of the total interests in partnership capital and profits were sold or exchanged within a 12-month period (per Code of Federal Regulations 301.6109-1[d][2][ii]). You should continue to use the terminated partnership's FEIN.

Note: If you are electing to be an S corporation, be sure you file Form 2553 (Election by a Small Business Corporation).

The U.S. government provides more information about changing your business form on the IRS Website. Also see Publication 1635 (Understanding Your EIN).

State Income Tax (Franchise Tax Board)

Complete FTB 3533 (Change of Address) if you change your personal or business address, or call FTB Customer Service at 1-800-852-5711.

Before you change your business structure, consider the tax benefits. Various business entity types are taxed differently. Filing requirements and tax forms may change, too. Review the business entity types below to learn about tax consequences for the different forms of business.

See FTB Publication 1038, Guide to Dissolve, Surrender, or Cancel a California Business Entity for more information.

State Payroll Tax (Employment Development Department)

Name, Address and Ownership Changes

If you have an EDD employer account number, you need to notify EDD in writing of any name, address, and/or ownership changes. When there is a change in the type of ownership but one or more owners of the business remain, the new entity usually keeps the same employer account number and continues to deposit taxes and file reports under that number. Although, a new account number is not required in most ownership changes, you still need to notify EDD of any change.

Buying, Selling or Discontinuing a Business

When buying a business with employees (or that previously had employees), you may be held liable for the previous owner's EDD liability if a Certificate of Release of Buyer (DE 2220) is not obtained. For your protection, escrow funds should not be disbursed until the DE 2220 has been issued. The seller (or you) may call the Employment Tax Call Center at (888) 745-3886 to request a DE 2220. You may also want to apply for the previous owner's reserve account. If you sell or discontinue a business, you need to contact EDD. You must file your final reports and make payment within 10 days of quitting business. You should provide the buyer with a Certificate of Release of Buyer (DE 2220).

For more information, see Changes to Your Business.

Sales & Use, Property, and Special Taxes (Board of Equalization)

Change of Ownership

You must notify the Board directly of any changes in ownership of your business. Incorporating a business or forming a partnership or limited liability company is considered a change of ownership and must be reported. Publishing this information in a newspaper or reporting it to another state agency is not sufficient notice.

In addition, if you add or drop a partner, you should notify the Board immediately. Timely notification to the Board could help limit the personal liability of the departing partner for tax, penalty, and interest charges incurred by the business after the partner's departure.

Please see Applying for a Seller's Permit for information on how to obtain a seller's permit. For more information on change of ownership, see Publication 73 (Your California Seller's Permit).

Buying, Selling, or Discontinuing a Business

Whenever you buy, sell, or discontinue a business, you need to contact the BOE. When buying a business, you may be required to obtain a seller's permit. When selling or discontinuing a business, your seller's permit must be closed out, as permits are not transferable.

For more information please see Buying, Selling, or Discontinuing a Business in the Frequently Asked Questions area of the BOE's Website and Publication 74 (Closing Out Your Seller's Permit).

Remember: Call our Information Center at 1-800-400-7115 if you have questions about what is required when you:

  • Buy another business
  • Change the ownership of your business
  • Sell your business
  • Discontinue your business

When you call, be prepared to give your:

  • Seller's permit number
  • Name and title (accountant, bookkeeper, owner, etc).
  • Business name

If you are an accountant, bookkeeper, secretary, or representative of the business and are requesting a change, you must be authorized by the owner to request changes to account information.