How to Make My LLC a Parent LLC

By Terry Masters

A subsidiary company is a company that is owned wholly or in part by another company. The company that owns a majority interest in a subsidiary is considered its parent. A limited liability company, or LLC, is an independent legal entity that can contract and own property in its own name. It has the standing to own interests in other businesses. To turn a regular LLC into a parent company, it would have to own a subsidiary.

Step 1

Form any type of business under the laws of a state. Every state has a business code that provides for the formation and registration of entities, including corporations, LLCs and partnerships. You can choose to form any type of business to serve as your LLCs subsidiary, including another LLC. Prepare the proper formative paperwork, such as articles of incorporation or articles of organization, for filing with the state agency that handles business registrations, usually the secretary of state.

Step 2

List the LLC as the sole owner of the stock or interest in the new business. The formative paperwork of the new business will typically ask you to identify the owners of the business. For an LLC, the articles of organization will likely request the name and address of the members. For a corporation, the articles of incorporation will request the initial number of authorized shares of stock and might request the names and addresses of the initial board of directors. List the LLC as the new corporation's sole board member. Issue all outstanding stock in the name of the LLC to indicate that it has 100 percent ownership.

Protect your loved ones. Start My Estate Plan

Step 3

Purchase all of the outstanding ownership interest in an existing business. The LLC can acquire a subsidiary through a purchase rather than by forming a new company. The LLC can buy all of the existing shares of stock of a corporation, for instance, or purchase the ownership interests of the members of an LLC or the partners in a partnership.

Step 4

Amend the formative paperwork with the state, if the LLC acquires an existing business. Some states require the current ownership or management of the company to be reflected on the company's articles, or require an annual filing to update the information. Additionally, the name and address of the company's registered agent must be kept current. File an amendment to the company's articles and a form to change the registered agent, if needed.

Protect your loved ones. Start My Estate Plan
How to Form an Umbrella Corporation
 

References

Resources

Related articles

How to Change the State of Incorporation

Corporations have several options when it comes to expanding to new locations or relocating the home base. The state in which the corporation chooses to incorporate is known as its home base, or "domicile." The corporation is considered a citizen of that state. It is relatively easy to obtain the authority to operate in other states as a foreign corporation, while changing the domicile is a more complicated procedure.

How Do I Modify an LLC?

One of the major benefits to forming a limited liability company, or LLC, is the flexibility afforded to an LLC. Under state corporation statutes, a corporation must have a board of directors. However, the owners of an LLC, who are called members, have the freedom to determine how their LLC will be structured and operated. Furthermore, the reporting requirements for an LLC are not as extensive as those of a corporation. While state laws vary, any modifications made to your LLC may or may not need to be reported to government agencies.

How to Change an LLC Filing as an S Corp to a Sole Proprietor

A limited liability company, or LLC, is a business structure defined by state law which protects its members from personal liability for company activity and involves a less complicated operational structure than a corporation. The IRS requires an LLC to elect tax treatment as an S corporation, traditional corporation, partnership or sole proprietorship. If you originally elected S corporation tax treatment and decide to change that election to sole proprietorship, you must withdraw your original election and submit a new one. Sole proprietorship election for an LLC is reserved for companies with only one owner-member.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help. Wills & Trusts

Related articles

How to Create a New Company or Subsidiary of an Existing Company

An existing company, or parent, can create a new company as an independent subsidiary at any time with the approval of ...

How to Start a Conglomerate Corporation

A corporation's status as a conglomerate comes from the way the corporation operates, not the way it is formed. A ...

What Happens to Assets in a Sole Proprietorship if it Changes to a Corporation?

A sole proprietorship is a simple way of running a business under the name and personal liability of the owner. The ...

How to Form a Subsidiary Corporation in Florida

A subsidiary corporation is a regular corporation whereby a parent corporation holds at least a majority of its ...

Browse by category
Ready to Begin? GET STARTED