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How to Convert Your Company From a C Corp to an LLC?

Convert Your Company From a C Corp to an LLC
Read Time: 3 min

When you first conceptualize a business and want to move forward with the same, you will be presented with two options based on which you can lay the foundation of your company. It can either be an LLC company that focuses on the Limited Liability Company, or you can choose to go forward with the C. Corp business domain. 

You will see that a lot of small businesses have started with the domain of C. Corp, but as time passes, they want to change and shift to a more sustainable LLC option. While you might think if this is possible or not, in the most straightforward terms, we can say that yes, you can convert your C. Corp business to an LLC very quickly.

But at the same time, it might look straightforward, but in reality, it is much more complicated. Converting a company from the C. Corp to the LLC portfolio is quite promising, and one of the primary reasons why many people want to go ahead with the LLC is because it saves them from double taxation. Only one tax is made on the owner’s income, which is quite promising for the new businesses.

Converting from a C. Corp to an LLC can be technical; hence, if you do not have much idea about the concepts, you can contact us at Profit Jets. A fundamental thing that you need to keep in mind under all circumstances is that the process is exceptionally lucid and the only thing that you need to do is have a good idea about the process before you go ahead and do the conversion.

Conversion of a C Corp Company To the LLC

Conversion of a C Corp Company To the LLC
Conversion of a C Corp Company To the LLC

Once you have decided that you want to convert your C Corp Company to LLC, there are a few factors that you have to check. The process is a bit technical and requires you to check on:

The State Laws

The first and most important thing you need to do when converting a C. Corp to LLC is to make sure you have a good idea about the state laws. There are a lot of governments who will not allow you to reframe the structure of your business, and in this case, the ultimate thing you need to do is dissolve your C. Corp Company entirely and build a new LLC, which is equally promising.

Statutory Conversion

When we talk about converting from a C. Corp to an LLC, a prevalent and straightforward method that is followed very often is none other than Statutory Conversion. This particular method is observed in many states in the USA where it is legal, and all you need to do is apply for the same to the Secretary of State’s Office. Some states have different forms that check on some factors; however, the basic process is the same, with just some additional forms that need to be submitted.

It is sometimes seen that the Secretary wants a few additional documents, and these will be intimated to you as well so that there is no kind of confusion at all. The most important thing about this conversion model is that it is straightforward and does not invite a lot of hassles.

Nonstatutory Conversion

As you can make out from the name itself, this process is ultimately the stark opposite of the other one that we just spoke about. Here the process is a bit complicated, and if you do not follow the step-by-step process, it can get tricky for you to keep tabs on the same. Here the first thing you need to do is incorporate the LLC, and for most states that do not allow the statutory conversion, this is the ultimate way to go forward. Unlike the other option we have mentioned, here, there is no automatic transfer for the shareholders, and you have to make a completely distinct requisition for this particular shift.

The first thing done is the basis of the new LLC is lead, and slowly, the presence of the old C. Corp is completely dissolved, leaving the new LLC as the ultimate option. Although complicated, nonstatutory conversion is quite a standard method.

Conclusion

C. Corp to LLC
C. Corp to LLC

None of us can deny that when it comes to conversion from C. Corp to LLC, the process can be a bit intimidating but not at all undoable. Make sure you follow the step-by-step procedure, which should not be challenging for you.