Converting a Business Entity
LLCs offer flexibility and help simplify taxation and maintenance. C Corps allow raising money through investors or taking a company public. Changing from LLC to C Corp is a big step.
Business Entity Comparison
An LLC offers limited liability and pass-through taxation. A C Corp has double taxation for profits and dividends. Once income hits high brackets, adapting to a C-corp can benefit.
Converting from LLC to C Corp
- Can you turn your LLC into a Corp?
- Yes, you can convert your Limited Liability Company (LLC) to a corporation. However, understanding the income tax consequences of such a conversion is essential.
Conversion Process
- There are three different ways to change your LLC into a C Corp.
- One of the key benefits of converting from an LLC to a corporation is the ability to raise capital.
- How to convert an LLC into a C Corp: Statutory Conversion.
Tax and Employer Identification Number (EIN) Considerations
- Does EIN change when converting from LLC to C Corp?
- You will need to obtain a new EIN if certain conditions are met.
- An explanation on the necessity of a new EIN when converting a business structure.
Conclusion
- Tax issues can be paramount in considering a conversion from an LLC to a corporation. The company’s accountants should calculate the tax effects of the conversion prior to undertaking it.
- There are four commonly used ways to convert an LLC to a corporation and one much less common way.