How to Change From an LLC to an LLP
Changing your business structure from an LLC, or Limited Liability Company to an LLP, or Limited Liability Partnership, requires you to file documents such as articles of organization, articles of merger or articles of dissolution with the secretary of state's office in your state. One or more of these documents may need to be filed to successfully complete a business structure change. Some states require all parties identified in LLC articles of organization to sign new documents recognizing changes in business structure, while other states only require one signature.
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Instructions
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Contact the secretary of state's office in your state to learn more about which forms to file when changing an LLC to an LLP. Most SOS websites include forms with instructions concerning different types of business structures. Some states request that you file a certificate of conversion, while other states require that you first dissolve the LLC and refile the business as an LLP. Submit all paperwork and fees to the proper department within the secretary of state's office.
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Contact the Internal Revenue Service to determine if you need to apply for a new Employee Identification Number (EIN). Since limited liability companies are entities created by the state rather than the federal government, the IRS taxes these businesses based on ownership. For example, if an individual owns an LLC, the business is taxed as a sole proprietorship. If more than one person owns an LLC, the business is taxed as a corporation, partnership or as a separate business entity. Classification depends on the type of business and how it is operated. Depending on how you filed business tax returns as an LLC, you may or may not need a new EIN when changing to a partnership.
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Create a partnership agreement. This agreement is to an LLC operations agreement. Include a description of management duties and responsibilities of all partners, ownership of shares within the partnership, elections and voting processes and the terms of partnership dissolution. Contact a lawyer to help draft this agreement to ensure all important information is included.
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Tips & Warnings
Update business cards, marketing materials, websites and other documents that bear your business name to show that you have changed business structures. Only limited liability companies can include "LLC," "LC," "L.L.C" and other abbreviations after the business name.
Research the pros and cons of forming a limited liability partnership before changing business structures. Some states do not allow you to form an LLP. You may have to form a general partnership, which could put your personal financial assets at risk in the event of business bankruptcy or lawsuit. Only limited liability companies and limited liability partnerships keep personal and business assets separate.
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- Photo Credit Hand and document at the meeting image by Dmitry Goygel-Sokol from Fotolia.com
