A limited liability company, or LLC, is a form of business association authorized by state statutes. The major advantage of an LLC over a corporation is pass-through federal taxation. The profits of a corporation are taxed twice, first when they are earned by the corporation and again when they are passed to its owners. The profits an LLC are not taxed when they are earned by the company. Converting from a corporation to an LLC without dissolving the corporation requires filing a document, called a Certificate of Conversion, with the state agency responsible for registering business organizations.
Check with your state business filing agency to determine if they permit the conversion of business entities. Most state LLC and corporation acts permit converting a corporation to an LLC without dissolving the corporation and establishing a separate LLC.
Elect to convert from a corporation to an LLC. If your corporation has an applicable voting clause in its articles of incorporation or bylaws, follow those rules. If not, you will likely need the agreement of a majority of all classes of stockholder to convert to an LLC.
Obtain a Certificate of Conversion form from the state business filing agency. Typically, these forms are available on the agency's website; if not, call the agency's office to obtain one.
Fill out the Certificate of Conversion form. Typically, you'll need to provide the name of your corporation, and the name and address of your corporation's registered agent for service; indicate whether your LLC will have the day-to-day management vested in members, who have an ownership stake, or managers, who are merely employees; provide the name and registered agent of your new LLC; and also attach a copy of your new LLC’s articles of organization.
File the Certificate of Conversion. The filing fee for a Certificate of Conversion varies by state, but can range anywhere from $50 to $300.