How to Convert a Subsidiary to a Single-Member LLC
Businesses often operate through complex organizational structures ito accomplish their revenue and tax goals. For example, many businesses own and operate subsidiary companies that provide other services or goods. A subsidiary is a legal business entity wholly controlled and owned by another group or business. A business might decide to convert the legal structure of a subsidiary to a single-member limited liability corporation, which would limit the legal liability of the subsidiary and take advantage of the other legal and tax benefits of an LLC.
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Instructions
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Contact the corporate department or agency of the state where your subsidiary is registered to do business. If the state does not have a department of corporations, business entities are often handled by the secretary of state. Request the form for conversion to a limited liability company.
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Fill out the limited liability conversion form. Most forms require you to indicate the name of the limited liability company, the company's owners, the original legal form of the entity, the agent for service of process, the company's address, and the number of LLC members. Sign and date the form as the authorized agent for the subsidiary.
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File the form with the appropriate department in the state. Pay any required filing fee. The governmental department will issue you a new certificate or other formal legal paper that indicates that the subsidiary is now a limited liability company.
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Tips & Warnings
This article does not constitute legal advice. Contact an attorney.
There are numerous tax consequences of converting a business entity to a limited liability corporation.
