Q: I would like to change my LLC to a corporation [in California]. Does your company have this service?
Thank you to Tianna Pham, CEO of Euphoria Builders Inc. ([email protected]) in Silicon Valley, CA for the great question! We are happy to help with business entity conversion in California. Conversion generally requires filing new formation documents, along with a statement of conversion. If you’re planning to convert your LLC to a corporation in California, here’s what you’ll need to do:
1. Create a Plan of Conversion
A plan of conversion is an internal document that defines the terms of your company’s conversion, an ensures all members of your California LLC agree to it. Before you file anything with the California Secretary of state, you’ll have to create this plan of conversion. According to CA Corp Code § 17710.03, your plan of conversion must include:
- Terms and conditions of conversion
- Place of organization of current LLC
- Name and location of new corporation
- Procedure for converting member interests into corporate shares, securities or interests
- Provisions of the governing documents of your new corporation (including California Articles of Incorporation and California Corporate Bylaws)
- Any other lawful provisions you’d like to include
Do I need approval from all members to convert my California LLC to a corporation?
You will need approval from a majority of members before you can convert your LLC to a corporation—unless your operating agreement requires approval from all members before you can make any significant changes to your company. (Check your operating agreement for details.) If your company is managed by managers, you will need approval from all managers, in addition to approval from members.
For more about LLC management structures, see: LLC Member Vs Manager.
2. File formation papers with the Secretary of State
To officially convert your California LLC to a California Corporation, you’ll need to file California’s Articles of Incorporation with Statement of Conversion form. This form must include:
- Name of new corporation
- Street address and mailing address (if different) for new corporation
- Name of registered agent
- Address of registered agent (if registered agent is an individual, rather than a corporation)
- Number of authorized shares
- Purpose statement (this text is already included in the state’s form and cannot be changed)
- Name of current LLC
- Current LLC’s California Secretary of State Entity Number
- Statement that the plan of conversion was approved by LLC members and/or managers (this text is already included in the state’s form and cannot be changed)
- Signatures of members and/or managers
You’ll need to provide a cover letter with contact information for your business and for the person filing the conversion form. This contact information will not be part of the public record. (A cover letter is included in the state’s form.)
How much does it cost to submit entity conversion forms in California?
The filing fee for submitting articles of incorporation with a statement of conversion is $150. You can choose to pay an additional $5 for certification.
How do I submit entity conversion forms in California?
You may submit entity conversion forms online (the state’s preferred method), in person or by mail.
Online: bizfile Online
In Person:
Secretary of State
Business Programs Division
Business Entities
1500 11th Street, Sacramento, CA 95814
By Mail:
Secretary of State
Business Programs Division
Business Entities
P.O. Box 944260, Sacramento, CA 94244-2600
3. Contact the IRS
You must contact the IRS anytime the structure of your business changes. When you convert from an LLC to a corporation, your company’s default filing status will most likely change from “partnership” to “corporation.” In this case, you will need to Apply for a New EIN using Form SS-4.