Steps for Conversion
To change an LLC to an S corporation, prepare a plan of conversion. Get the LLC’s members to approve the plan. File a certificate of conversion and articles of incorporation with the Department of State. To change the name of a corporation, file a Certificate of Amendment of Articles of Incorporation.
Tax Considerations
There are pros and cons to LLCs and S Corps. S Corps can save money on self-employment taxes. However, S Corps have higher corporate tax rates.
An S-Corp election can provide tax savings despite a late filing. S corps don’t have to file a Florida tax return if they pay federal tax on Line 22c of Form 1120S. Tax-exempt organizations with “unrelated trade or business income” must file Form F-1120 or F-1120A.
LLC to Nonprofit Conversion
To convert an LLC to nonprofit in Florida:
- Resolve to convert from an LLC to a corporation by voting.
- Choose a nonprofit name.
- File Articles of Incorporation.
- Transfer the LLC’s assets and liabilities.
From Corporation to LLC
To convert a Florida corporation to an LLC:
- Make a Plan for Conversion.
- Include the current and new names.
- Specify how shares will convert to ownership percentages.
- Approve Conversion by shareholder vote.
S Corp vs. LLC Taxation
There are tax benefits to changing an LLC to an S Corp. LLCs taxed as sole proprietorships pay more taxes than S corps because of "pass-through taxation."
Turning LLC into S Corp
How do I turn my LLC into an S Corp? File Form 2553 with the IRS. Shareholders must sign it. File by the 15th day of the third month of the tax year. Newly formed LLCs can file an election for the LLC to be taxed as an S corp within two months and 15 days of the date the business begins its first tax year.
Weighing Costs and Benefits
You should change your LLC to an S-Corp only if the benefits outweigh the costs.
Do you need a new EIN when converting LLC to S Corp?