Changing an S Corp to an LLC: What You Need to Know

The two most common business formats in the US are S Corporations and Limited Liability Companies (LLCs). Although both have advantages, LLCs have grown in popularity recently because of their adaptability, simplicity, and ease of management. There are a number of things to think about if you are now a S Corp and are thinking about switching to an LLC. How can I convert from a S Corp to a one-member LLC? There are various steps involved in converting from a S Corp to a single-member LLC. You must first submit your articles of organization to the Secretary of State’s office in your state. With the help of this paperwork, your LLC will become legally recognized in your state. The EIN of your S Corp cannot be utilized for your new LLC, thus you will also need to get a new EIN (Employer Identification Number) from the IRS. You must also acquire any business licenses and permissions needed from your state and local governments.

If I change from a corporation to an LLC, do I need a new EIN? For your LLC, you will indeed need a new EIN. While you might be possible to incorporate a new LLC with the same ownership and structure as your S Corp and utilize your current EIN for tax purposes, it is advised that you get a new EIN to prevent future misunderstanding.

Can a S Corp transfer property to an LLC? The answer is yes, a S Corp can give assets to an LLC. But before doing so, there are a number of things to take into account. Before making any transfers of assets from the S Corp to the LLC, it is advised that you speak with a tax expert because there may be tax repercussions. How long does it take to transform an LLC into a S Corporation? An IRS Form 2553 must be filed in order to convert an LLC into a S Corp. The IRS normally processes the application and grants the S Corp classification in up to 60 days. The precise timeframe, however, may change based on the complexity of your company’s organizational structure and the IRS’s workload.

In conclusion, there are a number of factors and stages involved in switching from a S Corp to an LLC. Even while LLCs provide a number of advantages, including as flexibility and simplicity of management, it is advised that you speak with a legal and tax expert before changing the way your company is structured.