Can I change my current LLC or S-Corporation to a C-Corporation?

Although there are various benefits of operating your business as an LLC or S corp, members and shareholders may wish to convert to a C corp. Here’s a quick guide to converting an LLC or S corp to a C corp.

Converting an LLC

There is not one LLC tax status or one conversion method. First, you must understand your LLC’s tax status. Next, you’ll need to choose from one of three types of conversion depending on your state laws. Here are your options:

  1. Statutory conversion: A streamlined process available in some states that lets you convert to a C corp by filing forms with the secretary of state.
  2. Statutory merger: This procedure requires you to form a new corporation and merging your LLC into it by submitting a merging document with the secretary of state.
  3. Non statutory conversion: The most expensive and complicated way to convert your LLC to a corporation involves special agreements to exchange membership interests and transfer assets.

Regardless of the method you choose to convert your LLC to C corp, you will need to make sure your new corporation is set up correctly. This includes getting a new Employment Identification Number (EIN), adopting corporate bylaws and issuing stock certificates. If you want to convert from an LLC to S corp, the process is similar.

Converting an S Corp

If you have an S corp but want to operate as a C corp, you have two options:

  1. Voluntary revocation: You can file a statement of revocation with the IRS to revoke your S corp status then file taxes the next year as a C corp.
  2. Termination by law: The IRS may terminate your S corp status if your corporation fails to meet eligibility requirements. This causes the corporation to automatically revert to C corp status.

Learn more about the benefits of starting a C corporation with the help of GovDocFiling.

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