How to Transition Your LLC to a Corporation

How to Convert Your LLC to a Corporation LLC Corporation 1 Forming new C Corporations has fallen in popularity over the years. The number of corporate tax returns has declined by 0.84 percent over the last 30 years. Forming new LLCS has substantially increased in popularity, with an increase of 21 percent over the last 30 years. 3 S Corporations have experienced a growth of 6.8 percent during the previous 30 years. But there are some compelling cases to transition from an LLC to an S Corporation or a C Corporation. Reasons to Switch from 2 an LLC to a Corporation Taking the business public If you want to IPO a business, then be a C Corporation. you must Selling private stock to U.S. investors LLCS don't have stock. If you want to sell stock to private individuals, then you must be an S or a C Corporation. Selling private stock to private foreign investors If you want to sell stock to foreign investors, must be a C Corporation. then you Paying less tax S Corporations potentially pay less tax than LLCS or C Corporations, although LLCS don't have to become an S Corporation completely to take advantage of this. If you're an LLC planning to take public or sell stock, you will need to switch. your business How S Corporations and 3 C Corporations Are Taxed S Corporation C Corporation S Corporation profits can be partly paid as salary and partly as C Corporations pay separate taxes on their profits, then on salaries and on dividends paid distributions. to shareholders. Owners can reduce the amount of payroll tax $4 they pay by taking out money as distributions. S Corporations are the most tax-efficient, followed by LLCS and C Corporations. 3 Easy Ways You Can Switch Your LLC to a Corporation Once you've made the decision to switch, you have a few options: Statutory Conversions As the simplest way, most states allow for this type of conversion, although rules do vary. You will need to download a form from the business registration agency's website, complete it and file it. Statutory Mergers Your next option is a merger. You create a new corporation, then transfer the assets and member interests across. You will need to file the correct documents with the business registration agency. Non-Statutory Conversions If neither of the above two options is available, you will need to dissolve the LLC, start a corporation and arrange for a sale and purchase of assets. Incfile can help. Contact us today, and we'll talk you through of switching your LLC to a corporation. Let us help you set up the right entity for your business. the process incfile References https://www.berkmansolutions.com/articles/entities/30-years-of-new-business-entities https://www.incfile.com/blog/post/transition-llc-to-corporation/ %24 %24