Using an Existing Entity for a New Business
Sometimes, a business owner may find themselves in a position where they want to move from one business endeavor to another. For example, the owner of XYZ Car Repair LLC decides to discontinue the car business and begin farming. The owner would like to use their existing LLC to operate the new farming operation. Is this possible?
The answer is yes. The same LLC (or any business entity) can be used to operate different businesses. Using the example above, the owner could simply use XYZ Car Repair LLC for their farming operation. While operating a farm under the name of a car repair business may be a bit odd, it is possible. Fortunately, the name of an entity can be changed.
An entity name can be changed by amending its Articles of Organization. For an LLC, a Certificate of Amendment (Form 611) is filed with the Ohio Secretary of State requesting to change the name of the LLC. If the new name is available and not in use by another entity, the request will be granted. The name-change process involves filing a simple form online and paying a $50 fee. A similar method is used to change the name of other entity types.
If a name of an entity is changed, the IRS needs to be informed of the name change. If the entity has not yet filed a tax return, a letter must be sent to the IRS informing it of the name change. If the entity has already filed a tax return, the name change can be identified on the tax return. Also, the bank that holds the entity’s bank account must be informed of the name change as well as all vendors.
In addition to changing the name, the purpose of the LLC may also need to be changed. When an LLC is registered with the Ohio Secretary of State, a purpose may be included with the articles. The purpose is sometimes used to limit the scope of the activities of the LLC. If no purpose is identified, the LLC can engage in any lawful purpose. Using the example above, assume the owners of the LLC included a purpose of “car repair and related business activity” for the LLC’s purpose. Before the LLC is used for farming, the LLC’s purpose should be changed to “farming” or “any lawful” purpose. The purpose identified on the articles of organization should match the actual operations of the LLC. The purpose is found by searching the entity on the Ohio Secretary of State website.
There may be circumstances where it may be just as easy, or easier, to set up a new LLC rather than using the same LLC for a different purpose. A new LLC can be registered with the Ohio Secretary of State for $99. A new tax ID number can be obtained online for no cost. It may be more convenient to establish a new entity rather than explaining to your bank and vendors that you have the same LLC with a different name.
To summarize the above discussion, it is possible to use an entity for a new business endeavor. However, you may want to change the name and/or the purpose of the LLC, both of which can be done by filing an amendment to the Articles of Organization. It is also worthwhile to explore establishing a new LLC for the new business as it may be easier than changing names and purpose.