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.

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.

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.

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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.

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