How to Transfer Liability From a Sole Proprietorship to a Corporation
When you operate a business under your legal name, the business is considered a sole proprietorship. As a sole proprietor, you are fully liable for everything that happens in and through your business. Some states do not require sole proprietorships to register. If your sole proprietorship is registered, the only way transfer liability to a corporation is to first dissolve the sole proprietorship. If your sole proprietorship is not registered, liability is automatically transferred when you register your business as a corporation.
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Instructions
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Dissolve Sole Proprietorship
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1
Visit the county clerk's office for the county in which the sole proprietorship is registered. In some cases, it may be necessary to contact the secretary of state's office, instead of the county clerk.
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Complete a “notice of dissolution” (exact form name varies).
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Submit the dissolution notice to the county clerk's office, along with the required processing fee. Once the clerk processes your request, your business is officially dissolved.
Register As Corporation
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4
Check with the secretary of state's office to determine if your desired business name is available.
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5
Request an EIN (Employer Identification Number) by completing and submitting IRS Form SS-4. This form can be submitted online, via postal mail or fax.
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Create articles of incorporation for your business. The articles of incorporation is a document that indicates the purpose and location of your business. Optionally, you can also create bylaws, a document that indicates how your business is operated and managed.
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Submit the articles of incorporation to the secretary of state's office. Pay the required processing fee.
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Wait to receive an official certificate, acknowledging the formation of your corporation.
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