McBride Law Blog

Changing From an LLC to a C-Corp

McBride Law Blog

// R. Shawn McBride // No Comments »

A writer on a forum recently asked me how you change from an LLC to an C-Corp. (Which is just a corporation that is taxed as a corporation and hasn’t elected, under the tax code, to be taxed as an “S” Corporation).

It seems they want more equity owners and think this is the answer.

Now I am not sure why the change is need as a well written LLC Agreement could allow for a large and diverse ownership base. Arguably, depending on the state of formation, you may have more possible structures for ownership with an LLC over a C-Corp.

Whether an LLC or a C-Corp is better is often a case-by-case decision.

Here are some materials on LLCs vs. C-corps for those trying to decide:
 
http://www.mcbrideforbusiness.com/live-on-womanars-part-7-llc-vs-c-corp/
 
http://www.mcbrideattorneys.com/llc-versus-s-corporation-versus-corporation-what-are-the-pros-and-cons/
But how to do get from being an LLC to being a C-Corp?  As in most cases it depends on the documents you have currently adopted, what state your LLC is in and what state your corporation will be in. But here are some of the items of paperwork you’ll typically need (order of filing may vary):
LLC Approvals for change to C-Corp (internal, members, etc.)
LLC State Filings to Note Change to State
Corporate State Filings to Set-Up Existence as Corporation
Adopting New Corporate Documents (Bylaws, etc. of the Corporation).
 
The state filings may or may not require some specific LLC or corporation documents – depends on the states in play. Under most state laws the C-Corp will be considered the continuation of the LLC for legal purposes.
Side Note: Check your contracts, leases, etc. before you do this as it may be a violation of contract or loan terms to do this transaction or may terminate some contracts you want to keep.
 
****NOTE: This is not legal advice but a general discussion. Legal advice would require knowing your particular situations, etc. You should consult counsel of your choosing to make sure you get the process correct for your situation.***

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