How to Change From Sole Proprietor to LLC Business

by Joe Stone

    Changing your business from a sole proprietorship to a limited liability company, or LLC, is accomplished by complying with the LLC laws in your state. Every state designates an agency -- usually the secretary of state’s office -- to oversee business activity, and provides forms and information to assist in business formation. Although state laws vary regarding the steps to create an LLC, all states require filing a document, usually called articles of organization, to bring an LLC into existence.

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    Step 1

    Locate the website for the agency in your state that oversees the creation of business entities such as LLCs. The federal government's website Business.gov provides a Web page with links to all 50 states' business filing offices that you can use to facilitate finding the appropriate agency in your state (see Resources).

    Step 2

    Locate the forms and information provided by your state agency regarding creation of an LLC. Most states provide forms and information in a format available for downloading; in some instances, the forms can be completed online and printed for filing. For example, the Illinois Secretary of State provides an 18-page guide on forming an LLC, and the Florida Department of Corporation provides a form of articles of organization with filing instructions and a form cover letter to facilitate filing.

    Step 3

    Complete the form provided by your state for forming an LLC. The minimum information needed will be your LLC's name, the address of its principal place of business, and the name and address of its registered agent responsible for receiving legal documents for the LLC. You may be able to act as your own registered agent, or retain the services of another person or company for this responsibility. Some state forms also require your name and address be included as the member of the LLC. Sign and date the form as the LLC's organizer or authorized representative.

    Step 4

    File the completed form at the appropriate address provided in your state's instructions accompanying the form. You'll typically have the choice of mailing the form or filing in person. A check for the required filing fee must accompany the form. These fees differ significantly from state to state; for example, as of 2010, $125 in Florida and $500 in Illinois.

    Tips & Warnings

    • The IRS does not recognize an LLC for income tax filing purposes. When you change your business from a sole proprietorship to an LLC, continue filing Form 1040 Schedule C as you did while operating as a sole proprietor.
    • Every state has either annual or biannual filing requirements for maintaining an LLC in good standing. Failure to comply with these requirements can result in a suspension or cancellation of your LLC. Also, a few states, such as New York, require a written operating agreement to be adopted after your LLC is formed. No state provides a form operating agreement, and this document is not usually filed with the state.

    About the Author

    Joe Stone is a freelance writer in California who has been writing professionally since 2005. His articles have been published on LIVESTRONG.COM, SFgate.com and Chron.com. He also has experience in background investigations and spent almost two decades in legal practice. Stone received his law degree from Southwestern University School of Law and a Bachelor of Arts in philosophy from California State University, Los Angeles.