Frequently Asked Questions
Q. What is a conversion?
A. A conversion is a filing that is made with the state of formation allowing an entity to change from its originally filed entity type to a different entity type. For example, if a business was originally formed as a limited liability company (LLC) and the owner wishes to change the structure to a corporation, they may wish to file a conversion as opposed to forming a completely new entity.
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Q. Is it possible to convert from one entity type to another?
A. Yes, it is possible to change from one entity type to another; however, the process is different from state to state, depending on the conversion taking place, such as limited liability company (LLC) to corporation or corporation to LLC.
In the most difficult instances, business owners must create a new company; transfer company assets from the old company to the new one; and dissolve the old company. However, some states have implemented more streamlined processes for conversion.
BizFilings can identify the necessary process for your company, based on the state of formation and the intended conversion. Please contact BizFilings' customer service team for information specific to your situation.
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Q. Can I convert my sole proprietorship or partnership to a limited liability company (LLC) or corporation?
A.Yes, although its not considered a conversion. In these instances, you need to form an LLC or form a corporation and transfer the assets of your old company into the newly-formed business entity.
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Q. Can I convert my C corporation to an S corporation?
A. Yes, although its not considered a conversion. An S corporation, or subchapter S corporation, is a standard corporation (C corporation) that has elected special tax status with the Internal Revenue Service (IRS). In order to elect S corporation status, a timely filing of Form 2553 must be made with the IRS. View the S corporation FAQs for more information on S corporation requirements.
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Q. Can I convert my S corporation to an C corporation?
A. Yes, although its not considered a conversion. Business owners must change their elected tax status with the Internal Revenue Service (IRS).
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Q. Does converting a company have tax implications?
A.Yes, a change in entity status may entail immediate or future tax costs. For example, if you liquidate a corporation in order to form a limited liability company (LLC), there may be tax to both the corporation and its shareholders. If, however, the corporation has losses, there may be no tax upon liquidation. It is best to seek the assistance of an accountant or tax advisor for advice on your particular situation.
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