Converting Your LLC to a Corporation

individual business corporation conversion

Converting Your LLC to a Corporation

As your business grows, you may want to change the type of entity it operates under. For example, if you’re planning to bring on investors or go public, a change from LLC to corporation can make sense for your business. However, if you’re considering a conversion, it’s important to know how the process will work in your state and how the change will affect your tax filings.

Converting Your LLC to a Corporation

In most states, changing your LLC to a corporation is a simple process called statutory conversion. In this process, you simply file paperwork with the state and your company will be converted to a corporation as a matter of law. 법인전환

If you’re unsure of the requirements for your particular state, you can check with an attorney to get a better idea of how to proceed. In some cases, your state requires you to prepare a plan of conversion and present it to the LLC’s shareholders for approval.

The plan must include the following elements: a description of the new entity and its shareholders, plans for the distribution of assets and ownership interests, and an explanation of how the business will be run post-conversion. If the conversion is approved, a certificate of formation must be filed with your state.

Statutory Merger

If your state doesn’t allow statutory conversions, you may need to undertake a more complicated change procedure known as a statutory merger. In this process, you form a corporation and have your LLC members formally exchange their membership interests in the LLC for shares in the new corporation. You must then file a certificate of merger with your state and any other required documents.

You must also transfer your LLC’s assets to the new corporation. This can be tricky and is best done with the assistance of an attorney.

Statutory Conversion: This is the most common and simplest method for converting an LLC to a corporation. In a statutory conversion, you simply file a document with your state to have your company changed from an LLC to a corporation.

After the statutory conversion, your company will be treated as a corporation and all of its assets will transfer to the new corporation by operation of law. This type of conversion is a great choice for businesses that don’t have a lot of capital to invest in a new corporation.

A statutory conversion is less expensive than a non-statutory merger, but it is more complex to implement. In a non-statutory merger, you form a new corporation and issue corporate shares to your LLC’s members. Then, you transfer your LLC’s assets and liabilities to the new corporation and dissolve the old LLC. 개인사업자 법인전환

Once your business has transitioned from an LLC to a corporation, you must file articles of incorporation in the new state and pay the necessary fees to do so. Your new business will now be a corporation and you’ll have to maintain corporate formalities like holding meetings of directors and shareholders, maintaining minutes and filing annual reports with the state.