By Jason Watson, CPA

Posted Tuesday, May 28, 2024

A lot of small business owners, especially solo operators, work from their home office. This is wonderful, however people change homes often and this can kickoff a bunch of address changes. Here are the considerations-

IRS
We can notify the IRS simply with a new address on a tax return. There are possibly three areas where this needs to the change- your 1040 naturally, and then on the business entity tax return (corporation or partnership). The business entity tax return has two places- the business itself, but then also you as the shareholder or member (the human). As such, if you receive K-1’s from other businesses where you do not control the tax return preparation, you should notify the CPA firm or the investment point of contact.

Where things get messy is when an address is changed on a tax return, but it is not updated with payroll processing. When a Form 941 is filed with an old address, the IRS will update (or revert in this case) your address using the newly filed Form 941. Now you start chasing your tail.

Form 8822 is used to update an address with the IRS for humans, and Form 8822B is used for business entities.

State Revenue Department
Similar to the IRS above. However, you might have local agencies too such a City or School District that collects taxes through tax returns.

Secretary of State
The Secretary of State is different than revenue departments. This is the agency that registers new businesses and administers renewals, conversions and dissolutions (closures). If you have a registered business, such as an LLC, we will need to update your mailing and physical address accordingly. There is usually a state filing fee associated with this as well, and varies from state to state.

If you are using a registered agent, then mailing address information will need to be updated with them. You might have two updates- one with the Secretary of State for physical address and one with the registered agent for mailing address. See! Messy!

FinCEN Beneficial Ownership Information (BOI)
If you were required to register your business with FinCEN’s Beneficial Ownership Secure System (BOSS), then your address will need to be updated there as well. Not sure what this is? Sounds scary, right?

After years of delays, the first stage of the Corporate Transparency Act (CTA) goes into effect on January 1, 2024. It imposes a new federal filing requirement for most corporations and limited liability companies (LLCs) with very few exceptions. 99% of the small business owners out there must complete FinCEN’s Beneficial Ownership Information filing. Yuck!

Payroll Processing
If payroll is being processed for your business either as shareholder payroll for your 1-person S Corp or a whole gaggle of team members, the payroll processor (ADP, Gusto, Paychex, Intuit, etc.) must have your new address. Payroll is where a simple address change becomes a big mess-

• We file a tax return on March 15 with a new address. Everyone is happy.
• ADP files Q1 payroll filings (Form 941 and state equivalents) on April 30 with the old address. Everyone remains happy, for now.
• The IRS and likely the state sends a letter, “Hey, thanks for updating your address. We will now send everything to your old address. Good luck.” Everyone is not happy.
• Form 8822 is filed with the IRS plus the state equivalent.

Other Considerations
You will need to update your address with your bank, your employer and any regulatory bodies as well. A new W-9 should be drafted and submitted to all those who send you 1099s.

These address changes get quite messy fast. In addition to the basics above, your business might also have the following-

Entity Move
Moving your business entity varies state by state, but the general process goes like this- we create a foreign entity in your new state, we dissolve the entity in your old state and we convert your foreign entity into a domestic entity. This continuity preserves the EIN. Not every state allows for this process. For example, Texas (as of this writing) does not have a conversion option.

You might also run into your business name not being available. This adds to the mess since all the address change stuff above also requires a name change.

Payroll Accounts
Payroll accounts in your old state must be closed and new ones must be opened. We usually overlap one quarter since opening payroll accounts varies between 1 day to 6 weeks depending on the state (Wyoming? 16 weeks! Woah!). For example, we might run payroll in Illinois on July 10 while we are setting up your new payroll accounts in Missouri. If all goes well, we process payroll (assuming shareholder only payroll) on August 10 in Missouri. Then, in October we close the Illinois payroll accounts.

As you can see, this can get tricky.

Please let us know right away about any upcoming address changes. Our fees vary depending what is needed. A simple address change that can be done with a tax return? No charge. In-state move with Secretary of State and payroll updates? A full-blown move across state lines? Please see our fee page below-

Jason Watson, CPA is a Senior Partner of WCG CPAs & Advisors, a business consultation and tax preparation CPA firm located in Colorado Springs, and is the author of Taxpayer’s Comprehensive Guide on LLC’s and S Corps which is available online and from mostly average retailers.