How to Convert an LLC to a Corporation

By Terry Masters

A limited liability company, or LLC, is formed under state law pursuant to a state's Limited Liability Company Act. In a few states, the Act specifically provides for the conversion of an LLC into another business entity type by filing a certificate of conversion and formation papers with the state. In most states, however, an LLC must dissolve and reform as a corporation to successfully complete a conversion.

A limited liability company, or LLC, is formed under state law pursuant to a state's Limited Liability Company Act. In a few states, the Act specifically provides for the conversion of an LLC into another business entity type by filing a certificate of conversion and formation papers with the state. In most states, however, an LLC must dissolve and reform as a corporation to successfully complete a conversion.

Step 1

Determine whether your state allows conversion of an LLC into another business entity. Go to the website of the state agency that handles business registrations, usually the secretary of state's office. It will be the same office that originally accepted the LLC's articles of organization. Go to the "forms and fees" section of the website and look for a template in the LLC section labeled "certificate of conversion of an LLC into another business entity" or something similar. If there isn't a form that facilitates this type of conversion, it is likely that your state doesn't provide for conversion. Double check by referring directly to your state's Limited Liability Company Act. Search for it online or visit the main branch of a public library.

Ready to start your LLC? Start an LLC Online Now

Step 2

Vote to dissolve or convert the LLC. An LLC is run by consent of its members. Some states require a majority vote to dissolve or convert. Other states require 100 percent written consent. Check your state's LLC Act and comply with its provisions.

Step 3

File a certificate of conversion and articles of incorporation with the state if it allows conversions. Fill-in-the-blank templates of both documents can usually be downloaded from the "forms and fees" page of the state's website, in the LLC section. The certificate of conversion requests basic information about the LLC, such as when it was formed, and basic information about the new entity, such as when the conversion will take effect. The certificate requires the new corporation to consent to be bound by all of the obligations of the transformed LLC. Articles of incorporation for the new corporation must be attached to the certificate of conversion. The articles require the same information as the LLC's articles of organization, with the addition of the amount and value of the corporation's initial shares of stock. Both documents require a filing fee.

Step 4

Wind up the affairs of the company if your state does not allow conversions. Pay all outstanding debts, including loans made by members to the company. Set aside enough money to cover any known obligations that will come due after the company is dissolved. Close all business accounts, including state tax account. Obtain proof that final state tax obligations have been met.

Step 5

File articles of dissolution with the state. A fill-in-the-blank form can usually be downloaded from the "forms and fees" section of the state website. The articles request the name of the company, whether the members consent to dissolution, the effective date of dissolution and the signature of the person filing the paperwork.

Step 6

File articles of incorporation with the state. Download an articles template from the corporations section of the "forms and fees" page. If you plan to use the same name for the corporation as the dissolved LLC, check with the agency regarding the procedure for carrying over the exclusive authority to use the name. The articles for the corporation will request information that is substantially similar to what was requested on the LLC's articles of organization, with the addition of a stock provision.

Step 7

Issue members of the dissolved LLC shares of stock in the new corporation in proportion to their ownership interest. Transfer the remaining assets of the LLC to the corporation in lieu of distributing it to members to effectively purchase their shares.

Ready to start your LLC? Start an LLC Online Now
How to Dissolve an LLC in Nevada

References

Resources

Related articles

How to Re-Open a Dissolved Company

In theory, corporations can exist forever, but they can also go out of business or be dissolved for other reasons. For example, you and the other corporate shareholders may dissolve one corporation to pursue another business venture; however, you can typically recreate your original corporation if you decide to go back to it. Corporations are independent legal entities formed under state law, and each state has its own laws that control the ability of dissolved corporations to reactivate.

How to Convert a Business to an LLC

Limited liability companies, or LLCs, offer liability protection for their members, while avoiding some of the negative tax consequences of corporate structures. It is possible for a business owner to convert a different business structure into an LLC even after the business has been operating for years. Generally, state laws require the converting entity to file paperwork with the state's business registration office.

How to Change From a DBA to an LLC

Any type of business can use a DBA, or "doing business as," designation as long as the proper paperwork is filed with the state where the business is operating. However, if the business is only using a DBA, it is most likely operating as a sole proprietorship. A sole proprietor must file articles of organization with the state to covert the business into a limited liability company, or LLC, and inform the state that the DBA registration is to be transferred to the new company.

LLCs, Corporations, Patents, Attorney Help

Related articles

How to Reactivate a Dissolved LLC

Filing articles of dissolution with the state that authorized its existence will officially dissolve a limited ...

How to Dissolve an LLC in Delaware

A Delaware limited liability company, or LLC, that wishes to close down and dissolve its registration with the state ...

Canceling an LLC

A limited liability company, an independent business entity formed under state law, comes into existence when a ...

How to Become an LLC Business

The choice of business structure is one of the first and most important business decisions a new owner can make, but ...

Browse by category