Converting a C Corp to an LLC is not an impossible task, but it is complicated and difficult because to go through this process by yourself.
To start with, you need to get some advice to make sure that restructuring is really the best thing to do based on your short/long term goals. To get some solid advice, schedule a consultation with a Bold Tax Attorney today.
Account for Assets and Liabilities
You have to transfer all the assets and liabilities of the corporation to the new LLC along with the filling out of a new LLC form. To avoid this complication and the wrath of double taxation, the conversion process can be resorted to. But, this is only possible if your state allows business unit conversion process.
We have a network of business attorneys and tax attorneys in every state in the US, and can be sure to get you in touch with an attorney in your state of formation to get the answer on this.
Avoid Dissolution of the C-Corp if Possible
In this way, you will not have to resort to traditional methods and there will be no need to dissolve the corporation. There are some states that do not provide such ease to the shareholders, so in such a difficult situation, you will have to investigate the agencies in which the formation of your corporation was implemented in the past. Along with this, you also have to see whether the facility of conversion process is available in the similar agency or not.
You’ll need to create a precise conversion plan that doesn’t conflict with your state’s business rules. You should have to focus on the plan’s requirements while strictly adhering to those rules.
The conversion plan will need to be approved by the majority of the corporation’s shareholders if a shareholder is required. If a plan is not required, it becomes necessary for most shareholders to approve the conversion. For example, state laws may also require shareholders to approve a board of directors resolution to convert a C Corp into an LLC. If the Articles of Corporation or the Bye-laws of the Corporate provide a specified majority for a vote, then the need to approve that majority will arise.
In addition to filing a conversion document or form, also known as a conversion certificate, article of conversion, or statement of conversion, you may need to file other required forms.
For example, articles of organization or certificate of formation for the new LLC. During this filing, different charges have been set in different states. When you receive the conversion of your corporation to an LLC through your state’s business entity conversion process, the corporation’s assets and liabilities are automatically transferred to the LLC.