Can a corporation change Business Activity code

[Naveen Mohan from New York]

I have a client with S corporation. He has owned and operated a convenience store business under that corporation. He has sold that business and now he wants to own and operate a restaurant under now empty corporation.

 

Can he do that? does he need  any permission from IRS before he starts this business.

 

Thanks for your help.

 

Naveen Mohan

[rfassett]

He can do that. That activity code is for the activity for the business being reported on that year's return. Beyond changing the code on the return, no further IRS permission or notification is necessary.

[jklcpa]

Yes, Ron is correct on that.  The only thing I want to add is to consider if notifying the state is necessary also, Are there any state or local taxes that having differing rates depending on the business activity?

 

We have a Delaware "gross receipts tax" with a stated rate applied to amounts over a stated exemption, and those are all assigned when the business files its first business license application. The state has a variety of rates and exemptions that it assigns depending on the activity of the business. Filing frequency can also differ.