How to Switch an LLC to an S-Corp

Change your LLC business to an S-Corporation.

Changing a limited liability company (LLC) into an S-corporation is a simple process. Most businesses looking for personal liability protection choose an LLC status to begin. When business owners desire to convert their business entity, it is usually due to an attempt to attract investors or gain fringe benefits. However, the steps to make the conversion vary from state to state. The creation of a new business entity is established after the conversion is final.

Things You'll Need

• Articles of incorporation
• State conversion form
• State filing fee
• IRS Form 2553
• New bank account
• New employer identification number

Instructions

1. Research the exact requirements needed to make the conversion. The process of converting business entities vary from state to state, including differing fees and requirements.

2. Write out your articles of incorporation. This document dictates the rules and regulations of your corporation. Include your company's name, address, purpose for business and stock information.

3. Write out your shareholder agreement. If you are unsure how to draft one, consider consulting a qualified lawyer, or purchase software to help you complete one.

4. Fill out a conversion form for the state you conduct business in, and submit it to your secretary of state's office. Include your articles of incorporation with this form. Pay the state requirement fee when submitting your business information. This amount will vary from state to state.

5. Obtain a new employer identification number. Establish a new checking account that bears your new business name. Although there may be some states that will not require this step, many states will.

6. File IRS Form 2553. If you are forming your S-corporation in the middle of the year, file this form when the new tax season starts in January.

Tips & Warnings

• File Form 2553 no later than March 31st of the current year to ensure your tax information is accurate and reflects the status of your changed business entity.

References

• FindLaw: Writing and Filing the Articles of Incorporation
• FindLaw: Corporations vs. LLCs