How Do I Convert a Sole Proprietorship to an LLC? Converting from Sole Proprietorship to LLC

Many entrepreneurs prefer the conversion of a sole proprietorship to an LLC to protect personal property from business-related lawsuits. However, in some states, certain professionals can’t form an LLC.

Key Steps in Converting to an LLC

  • Choosing a registered agent
  • Filing registration paperwork with the state government
  • Applying for business permits
  • Obtaining an employer identification number (EIN)

Submission of LLC Application

The application for registering the transformation of a sole proprietorship into an LLC should be submitted by all members of the transformed company’s management board.

The process of converting an LLC into a sole proprietorship is complex and requires examination of the legal and financial implications. Nevertheless, the process involves: Dissolving the LLC, filing a Certificate of Dissolution with the state, and distributing assets to members.

  1. Confirm business name availability
  2. File articles of organization
  3. Draft and execute an operating agreement
  4. Tie up loose ends

Advantages of LLC Conversion

  • Limited liability
  • Pass-through taxation
  • Ease of establishment

Seek professional advice before changing your business structure. Consider your business risks and if an LLC is right for you. Because of limited liability, many prefer changing a sole proprietorship to an LLC to protect personal assets. However, in some states, certain professionals can’t form an LLC.

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