How to Convert an LLC to a Corporation (ULTIMATE Guide 2023)

You may be wondering, in your quest to upgrade your entity, how to convert your current LLC to a corporation. This is not as intimidating as it may seem. As long as you know who to contact in the legal community, you can proceed with confidence. 

By using the right legal provider, you can get a better understanding of the conversion process and set up a company structure that best fits your operational style.

To learn more about how this is done, read the following article, then book a call to speak to us here: https://mollaeilaw.com/start. We are available 24/7 to take your calls.

 

Why Does a Business Convert an LLC to a Corporation?

A business may convert an LLC to a Corporation for one of various reasons. While this type of conversion subjects the business to double taxation, it still makes it possible for start-ups to position themselves to attract more money for investing. When a beginning company converts from an LLC to a corporate entity, it can attract investment opportunities from venture capital funders or similar investors.

That is why it is always a good idea to review your options in this respect.

Maybe you are a bootstrapper, or a business that depends on your own resources. If you are not sure about funding options, you may want to take a wait-and-see approach, and figure out what you want to do later. In this case, you can initially create an LLC and convert your business to a corporation if you belive you would stand to gain.

Although owning a corporation involves more legalities and paperwork, it can help you expand your influence from an investment view. Therefore, you have more funding options open to you.

To receive legal consultation about an LLC to corporate conversion, book ad call or speak to us here: https://mollaeilaw.com/start.

 

How to Convert Your LLC to a Corporation – Reviewing the Three Main Methods

To simplify things, you can learn how to convert your LLC to a corporation by choosing one of the methods below. This will give you a better idea about the process – a process that can be done, with the help of a competent attorney, more easily. Let’s look at the methods so you can begin.

Usually, you can choose from one of three ways if you wish to convert an LLC to a corporation. What you elect will depend on where you want to incorporate, whether or not you plan to dissolve and liquidate your LLC, or how fast you want to make a change.

Elect to Convert Statutorily

If you want to choose a statutory conversion, the process is pretty basic. All you need to do is complete the required documentation and submit it to the Secretary of State’s office where your LLC is based. To ensure you know what you are doing and where you are at in the process, book a call to speak to us here: https://mollaeilaw.com/start. 

What Type of Information You Will Need

To fill out the paperwork, you need to add the following:

• The company name and address
• Employer identification number (EIN)
• Contact information for the registered agent.

The conversion paperwork must be acknowledged and signed by all the LLC members agreeing to the conversion transfer. The cost for the transfer can range, depending on the state, from $50 to $300.

Opt for a Statutory Merger

Some states do not permit statutory changes, such as Arizona. If this applies to you, you will need to follow a method known as a statutory merger. In this instance, however, you will not convert the LLC to a corporation. Instead, you will merge the LLC with a new S corporation or C corporation that you create.  You perform the merger as follows – 

• Create a new corporation
• The LLC members vote to change from membership status to that of shareholders
• Members in the LLC agree to change membership rights in exchange to agreed corporation shares
• A certificate of merger and related documents are filed, as required by the Secretary of State’s office

Liquidate and Buy Your Shareholder’s Interests

The most complex and costly way to convert an LLC to a corporation is by a non-statutory conversion. This type of conversion requires that you liquidate and dissolve your current LLC to form a corporation. The liabilities and assets, after liquidation, are transferred to the newly created corporation. LLC members must sign an agreement that shows they wish to become stockholders. However, in this transacton, the LLC owners must buy the shareholders’ interests in the new corporation.

 

What Additional Steps Do You Need to Take if You Want to Convert an LLC to a Corporation?

Once you have decided how you want to convert an LLC to a corporation, you will need to follow certain rules – guidelines that all corporations must follow to stay in force. Some of these rules include the following:

• Writing and filing the articles of incorporation
• Composing the corporate bylaws
• Electing the corporate directors
• Appointing a director for your corporation
• Scheduling regular board meetings
• Creating stock certificates

If all the above information is hard to grasp and digest, don’t worry. You can alleviate any concerns along these lines when your book a call to speak to us here: https://mollaeilaw.com/start.

As you can see, converting from an LLC takes some planning. That is why it is best to retain legal services and use them regularly in all your business dealings.

 

What to Do Next

If you are wondering the best way to convert an LLC to a corporation, you need to review your options with an experienced legal mentor – someone who can guide you step by step before and after a conversion.

Book a call to speak to us here: https://mollaeilaw.com/start.

When you work with an attorney, you will instantly gain a competitive advantage. Make sure you know what you want to do and that you can establish a business where you can benefit financially and professionally.

Give us a call today to receive the legal assistance you need.