If you want to convert your corporation to an LLC, you need to find a legal advisor who can help you do so. Therefore, after you read the following information, book a call to speak to us here: https://mollaeilaw.com/start.
Once you get an idea what to expect, you can work with a highly qualified business lawyer to learn how to make this important business upgrade or change.
Why Do Businesses Choose to Convert a Corporation to an LLC?
You may have one or more reasons to convert a corporation to an LLC. In most cases, businesses take this step for tax reasons or to establish themselves as being a privately held entity.
Also, taxes flow through to the LLC owner – something that cannot happen with a corporation. If a company discovers that it does not need to raise capital as a corporation, an LLC is an attractive alternative.
To ensure that you make the right decision along these lines, again, it is important to speak to a legal professional – someone who can help you take advantage of establishing an LLC, and do so in a streamlined fashion.
Book a call to speak to us here: https://mollaeilaw.com/start today. The more proactive you become, the better the results for this type of transaction.
Making the Decision to Convert a Corporation to an LLC – How It Can Happen
During the life of a corporation, it is not unusual to make some changes – changes that ultimately lead the owners to convert a corporation to an LLC. Some of these changes may include the following:
- The company may change its name for branding (this can become quite expensive).
- The stock structure may change.
- The registered agent may be replaced by another company or person.
- Modifications may be made to the certificate of incorporation.
When the decision is made to change to an LLC, shareholders and owners may believe that shares do not need to be issued to obtain capital funding. They may also want to skip many of the formalities.
If you feel that you should make this change, you need to book a call to speak to us here at https://mollaeilaw.com as soon as possible.
What Happens when You Convert a Corporation to an LLC?
Once you convert your corporation to an LLC, you will find that this type of entity is much easier to manage, and you do not have to comply with as many rules and regulations. The LLC eliminates the following:
- The shareholders, board of directors, and officers
- The formal meeting requirements, such as taking minutes
- The articles of incorporation
Instead of dealing with the above-mentioned arrangement, an LLC allows you to create an operating agreement that can be revised, when needed, from time to time.
Therefore, an LLC is often more flexible to manage and operate. If you have decided to make a switch to an LLC, you want to form a company that can be overseen with less regulation and risk.
How Do You Statutorily Convert a Corporation to an LLC?
An easier way to convert a corporation to an LLC is to do so statutorily. This type of change permits you to transfer your assets and liabilities over the over to the limited liability company (LLC).
Just like a Roth IRA, the corporation rolls over or converts to an LLC. This is done through a two-part conversion process, or filing. The filing is therefore composed of the following:
- The creation of a certificate of conversion, which officially converts the corporation to an LLC; and
- The drafting of a certificate of formation, which makes the formation of the LLC official.
What Do You Need to Include in the Certificate of Conversion?
You will need to file both certificates with the secretary of state of the jurisdiction for the LLC. The following should be included with the certificate of conversion:
- The original name of the corporation.
- The original venue for the formation of the corporation.
- The LLC’s name – included in the filed certificate of formation.
What Should Appear on the Certificate of Formation?
The certificate of formation, which is filed at the same time as the certificate of formation, must contain the following details.
- The new name of the LLC
- The name and address of the state registered agent.
After the certificates are filed, you only have a couple more steps to complete. We can help you with the entire conversion process. Book a call to speak to us here: https://mollaeilaw.com/start.
You will also need ongoing legal help and advice after you have established your new LLC.
What Fees Do You Have to Pay to Convert a Corporation to an LLC?
Besides filing feed, you also usually need to pay a state franchise tax when you convert a corporation to an LLC. This tax amount depends on where you establish your LLC. Along with the tax, you need to submit an annual report for the corporation.
To make sure you do everything right or don’t have any difficulties, have your attorney take care of getting the proper documents and filing them, as required. Don’t try to submit any documents without getting back-up support from legal counsel.
Are Legal Claims Still Valid if You Convert a Corporation to an LLC?
Any legal claims due remain in effect if you convert a corporation to an LLC. The corporation has not, technically, been terminated. As noted, it simply rolls over into an LLC. Also, any corporation agreements remain in force after a company statutorily becomes an LLC. Therefore, you do not need to reissue any previous contracts.
Once your company becomes an LLC, you no longer have to file an annual report. A year after the conversion, you do not have to submit the document. Usually, only the franchise tax payment is due.
What To Do Next
If you are wondering what you should do at this point, or still have questions about how you should convert a corporation to an LLC, contact us to set an appointment for a consultation.
We can help you as soon as today. Book a call to speak to us here: https://mollaeilaw.com/start.
If you feel that it is in your best interests to switch from a corporation to an LLC, we can help you make the transition easily and hassle-free.
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