Not a lot is certain in business, but one thing that is certain is that business is constantly changing. Sometimes these changes might result in the need for you to convert your business from one type to another.
Read on to learn more about the conversion process and things you’ll need to consider before converting your business entity.
Converting a business structure simply means changing a business’s structure from one type of business entity to a different one. For example, if you were currently operating your business as a limited liability company (“LLC”), the conversion process would allow you to transform your company into a C corporation. You wouldn’t need to close your business in order to re-incorporate a new business, starting a completely new organization.
To complete a business conversion, you will need to file the request in your state of business according to their requirements.
While it may be a relatively uncommon practice, major changes in your company’s operations may necessitate changing your business’s structure. It’s also possible that converting your structure could be financially beneficial, and worth the effort.
For example, the owner of a smaller C corporation (“C corp”) may decide that making the switch to an LLC would be worthwhile, as that change would mean that he or she would qualify for pass-through taxation status. Practically, this means that the new LLC would not be taxed in the same manner as the C corp. The owner of the new LLC would not pay corporate income taxes as was required when the business was a C corp.
LLCs are also occasionally known to restructure themselves as corporations, in order to become eligible for venture capital and to increase the available number of funding options.
Similarly to how business entity filing processes vary by state, as do conversion filings. Each state has there own set of regulations for how a business owner can change their entity type (if at all). In addition to variances by location, the conversion process will also vary according to the type of conversion taking place; for example, an LLC to a corporation or a corporation to an LLC.
Some states do not allow business entity type conversions at all, including:
If you need help determining what your options are, contact one of our business conversion specialists.
After a business changes its formal structure, it becomes subject to different taxation requirements. In fact, this is one of the biggest concerns that must be addressed before starting the conversion process. Not only may there be one-time taxes due immediately upon successful conversion, but the long-term and ongoing tax implications placed on your business can be significant as well. Keep in mind that the changes in tax may be either positive or negative. It is strongly advised that you talk with an experienced accountant before committing to any change in your company’s structure.
Converting to a different type of formal entity may provide your business with a number of financial advantages. Be aware, however, that each state requires you to follow very strict procedures in order to restructure. You must carefully follow these established methods.
It is also advisable that you speak with a tax professional. This will help you come to a detailed understanding of exactly how the change will impact your company’s bottom line.
The processes required to accomplish conversion vary wildly, depending on a number of factors. Not only does each state have different conversion requirements, but the chosen structures involved in the conversion can create a completely different set of state regulations as well. For example, transitioning from a sole proprietorship to an LLC can be a relatively quick process, while the LLC to C corporation conversion can be lengthy and resource-intensive.
Keep in mind that when you change in your company’s structure, you will be required to follow different ongoing compliance requirements as well. This can be especially true if you are converting an LLC into a corporation. Be sure to pay close attention to these changes in order to ensure that your business will be able to keep itself in “good standing” with your state.
And, of course, if you have any questions about compliance, feel free to contact the experienced business professionals here at Swyft!
We know this process may seem overwhelming. That’s why we developed our business conversion service. Let us take care of ensuring compliance with all of the many regulations while you take care of running your business.
The service is designed to help your company complete the formal restructuring process as quickly and efficiently as possible. It includes:
A detailed outline of the steps necessary to undergo the conversion
The acquisition and preparation of any required state forms
The submission of any required forms to the relevant state agency
A formal notification regarding the completion of the conversion process, as well as the original copies of any state-handled and approved documents
Let us take the stress out of your business’ entity type conversion, get started here.
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You can form a corporation or LLC with our help for as little as $0, plus state filing fees for incorporation. Filing fees vary depending on the state you incorporate in. For more information on specific states, check out our state guides on the Swyft Resource Center. You can also email us with specific questions or contact us at 877-777-0450.
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It depends on what you ordered. If all you did was file your corporation or LLC, the price you paid when ordering is all you pay. You will have no further fees after that.
However, if you signed up for the Swyft Filings Registered Agent Service, you will be charged its initial fee three days after you place your order. From then on, you will be charged according to the terms of your subscription until you change your registered agent with the state or dissolve your company. If you change your agent or dissolve your company on your own, let us know so we can discontinue billing.
Other potential subscription-based options include SnapMailbox, 360 Legal Forms, and ComplianceGuard. If you opt for SnapMailbox or 360 Legal Forms, you will be charged a monthly fee after their respective 30-day free trials end. ComplianceGuard has an annual fee after a 14-day free trial. All three of these services are completely optional.
Our team processes all Standard orders on a first come, first served basis. If you opt for Express or Same-Day Processing, we prioritize your order and send it to the front of the line. However, no matter how fast we get it out the door, you’ll still have to wait for your state to address your filing.
Each and every one of our customers is assigned a personal Business Specialist. You have their direct phone number and email. Have questions? Just call your personal Business Specialist. No need to wait in a pool of phone calls.
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