The filing fee for the merger of a Texas limited liability company that creates a Texas corporation is $300 plus $300 for a total of $600. If you are planning to convert a foreign entity to a Texas entity of the same type, you should make sure the conversion transaction complies with the law of the entitys current jurisdiction of formation and the entitys governing documents, as well as the Texas Business Organizations Code (BOC). Your cover memo, certificate of conversion and certificate of formation can be filed online using Delawares Document Upload Service. Laws, c. 360, 10; 72 Del. Laws, c. 329, 29; 74 Del. To convert your Delaware corporation to a Delaware LLC, you need to: get the corporation's stockholders to approve the conversion; and. First, let's be clear that there is not just one kind of corporation, one tax status for an LLC, or one kind of conversion. Checks and money orders should be made payable to the Department of State. Please do not send cash through the mail. (j)The provisions of this section shall not be construed to limit the accomplishment of a change in the law governing, or the domicile of, an other entity to the State of Delaware by any other means provided for in a limited liability company agreement or other agreement or as otherwise permitted by law, including by the amendment of a limited liability company agreement or other agreement. You're all set! upon the occurrence of a specified event that will occur within 90 days from the date the instrument is signed. Another option is to hire a business services company. Conversion statutes in New York only allow the conversion of a general partnership or limited partnership into a limited liability company, either creating a new LLC as a result of the conversion or converting into an LLC that was previously formed. If the limited liability company agreement does not specify the manner of authorizing a conversion of the limited liability company and does not prohibit a conversion of the limited liability company, the conversion shall be authorized in the same manner as is specified in the limited liability company agreement for authorizing a merger or consolidation that involves the limited liability company as a constituent party to the merger or consolidation. Do you need legal help with converting LLC to C Corp Delaware? There are a few different ways you can register your LLC in Delaware, including: Though domestication is often the most streamlined way to move an LLC from one state to another, youll have to choose the method that works best for your business. You can create your own instead of using the states template, just make sure it includes your name, address and telephone number. Form of Plan of Conversion - SEC.gov The other steps are fairly similar as well: theres a transfer of assets, a transfer of ownership, and a dissolution of the original entity. In this article, well discuss everything you need to know about the LLC certificate of conversion. If no statement is filed, the instrument will not be effective. You can check the current price on the website of the Delaware Division of Corporations. Please check official sources. Laws, c. 85, 14; 74 Del. Contact the Division of Corporations, State Records, and Uniform Commercial Code, This page is available in other languages, Certificate of Conversion for Domestic Limited Liability Companies. Copyright 2023 MH Sub I, LLC dba Nolo Self-help services may not be permitted in all states. The Credit Card/Debit Card Authorization Form submitted with any request for services must specifically indicate the level of expedited service requested. (d)Notwithstanding 18-303(a) of this title, under a limited liability company agreement or under another agreement, a member or manager may agree to be obligated personally for any or all of the debts, obligations and liabilities of one or more series. The envelope bearing documents for filing and other requests for expedited processing services must be marked with the notation "Expedited Processing" on the envelope. Laws, c. 51, 5; 75 Del. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. This procedure, technically known as "statutory conversion," will automatically convert your current business and the business's assets and liability to the new entity. Do I need tax clearance for the conversion? The attorney listings on this site are paid attorney advertising. The real complicating factor is whether or not your state allows for a statutory conversion, which is the process that requires a certificate of conversion. $200filing fee forCertificate of Conversion. Actions taken in accordance with this subsection shall not affect the liability of members and shall not impose liability on a liquidating trustee. Converting an LLC to C Corp is easy. Laws, c. 387, 8, 9; 78 Del. Starts at $0 + state fees and only takes 5-10 minutes. The filing fee for converting a Delaware limited liability company to a Texas limited liability company is $300 plus $300, for a total of $600. PDF Delaware Certificate of Conversion - Illinois Delaware State Code Failure to obtain the appropriate certificate of account status from the Texas Comptroller of Public Accounts or to provide the alternative statement regarding payment of all required franchise taxes by one or more of the surviving, new, or acquiring organizations (mergers) or by the converted entity (conversions). Except as otherwise provided in a limited liability company agreement, any event under this chapter or in a limited liability company agreement that causes a manager to cease to be a manager with respect to a series shall not, in itself, cause such manager to cease to be a manager of the limited liability company or with respect to any other series thereof. Delaware Courts Do I need tax clearance for the merger? Delaware Certificate of Conversion Form of Plan of Conversion - SEC.gov It's important to know the necessary steps in this type of conversion so that your business does not run afoul of the law. You could hire a business attorney to convert your business entity, although this is an extremely expensive route that could see your expenses climb into the thousands of dollars. (4)The termination of such series under subsection (m) of this section. The filing fees for a merger are $300 ($50 for nonprofit corporations and cooperatives) plus the filing fee for any new Texas filing entity created by the merger. The secretary of state has adopted a number of forms that meet the minimum statutory filing requirements for certain specific types of mergers and conversions under the Texas Business Organizations Code (BOC). Withholding Tax A limited liability company agreement may provide that any member or class or group of members associated with a series shall have no voting rights. Texas allows conversions from out-of-state (foreign) and domestic entities. Talk to a Business Law Attorney. Transparency (k)Subject to 18-801 of this title, except to the extent otherwise provided in the limited liability company agreement, a series may be terminated and its affairs wound up without causing the dissolution of the limited liability company. Social Media, Built by the Government Information Center Converting LLC to C Corp Delaware - UpCounsel The process that will enable you to change your existing business structure is Delaware entity conversion and this article will take you through what it is and the different business structures that you can change to like the process to convert a corporation to an llc in Delaware. General Corporation Law. Laws, c. 105, 22-28; 78 Del. General Assembly 1998 2023 Copyright Northwest Registered Agent, LLC. MMXXIII Delaware.gov, Adoption of Transparency and Sustainability Standards. PDF Delaware Division of Corporations Dover, DE 19901 Confirm the capitalization of the business before and after conversion. On the contrary, there are: We won't be looking at every possible combination of these variables. The basic filing fees for this process should total $290, which includes $200 to file the certificate of conversion and $90 to file the certificate of formation. Write a Plan of Conversion. Access tools to help you manage income and expenses. Unless otherwise provided in a limited liability company agreement, a series established in accordance with subsection (b) of this section shall have the power and capacity to, in its own name, contract, hold title to assets (including real, personal and intangible property), grant liens and security interests, and sue and be sued. If the partnership or limited partnership is converting into an existing limited liability company, the name of the limited liability company and the date of filing of the articles of organization must exactly match the records of the Department of State. Division of Corporations, State Records and Uniform Commercial Code, Section 1006 of the New York State Limited Liability Company Law, Credit Card/Debit Card Authorization Form, To pay for a fee using your credit card or debit card, complete and sign the. SET UP LLC SET UP INC Delaware Business Entity Conversion Similarly, the certificate of formation at least will contain basic information about the name and address of your new LLC, as well as the name of the LLC's registered agent, if you have one. All checks over $500 must be certified. You already receive all suggested Justia Opinion Summary Newsletters. To domesticate an LLC in Delaware, you'll need to fill-out and file three forms: Certificate of Conversion (make sure it's specifically: "Non-DE LLC to DE LLC") All three documents should be submitted together, in the above order. The business has to file for a Certificate of Authority if the post-conversion C Corp intends to operate in the state of Michigan. Laws, c. 389, 14-18; 74 Del. If you have specific legal questions, consult your attorney. delaware the first state page 1 i, jeffrey w. bullock, secretary of state of the state of delaware, do hereby certify that the attached is a true and correct copy of the certificate of conversion of a delaware corporation under the name of "cbts technology solutions inc." . The filing fee for converting a Texas professional association to a Texas limited partnership is $300 plus $750, for a total of $1050. (a)A limited liability company agreement may establish or provide for the establishment of 1 or more designated series of members, managers, limited liability company interests or assets. By the same token, there is also no need to dissolve your corporation; on the contrary, under Delaware's conversion statute, the one business entity involved in the conversion, which is originally a corporation, is simply considered by default to continue its existence in the form of an LLC. The filing fee for converting a Texas limited liability company to a Texas general partnership is $300. (g)Unless otherwise agreed, for all purposes of the laws of the State of Delaware, the converting other entity shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not be deemed to constitute a dissolution of such other entity. Subject to 18-602 of this title, a manager shall cease to be a manager with respect to a series as provided in a limited liability company agreement. In addition to basic information, the Certificate of Conversion typically . Pursuant to Section 265 of the DGCL, the Company shall cause to be filed with the Delaware Secretary of State a certificate of conversion in substantially the form attached hereto as Exhibit A (the "Certificate of Conversion") providing for the Conversion.The Conversion shall become effective at the time specified in the Certificate of Conversion, which time shall occur prior to the . The provisions of the Texas Business Organizations Code do not prohibit the conversion of a Texas for-profit corporation to a nonprofit corporation. Register your business name with the state to keep others from using it. The termination of a series established in accordance with subsection (b) of this section shall not affect the limitation on liabilities of such series provided by subsection (b) of this section. Note that while the certificate of conversion and certificate of formation may appear straightforward, some of the issues involved in converting your particular business may involve unexpected complications, particularly with regard to the certificate of formation; therefore, it may be advisable to consult with a business attorney before completing these documents. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb. In addition, the foreign limited liability company shall state on such application whether the debts, liabilities and obligations incurred, contracted for or otherwise existing with respect to a particular series, if any, shall be enforceable against the assets of such series only, and not against the assets of the foreign limited liability company generally or any other series thereof, and whether any of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the foreign limited liability company generally or any other series thereof shall be enforceable against the assets of such series. (e)The conversion of any other entity into a domestic limited liability company shall not be deemed to affect any obligations or liabilities of the other entity incurred prior to its conversion to a domestic limited liability company or the personal liability of any person incurred prior to such conversion. If the limited liability company agreement does not specify the manner of authorizing a conversion of the limited liability company or a merger or consolidation that involves the limited liability company as a constituent party and does not prohibit a conversion of the limited liability company, the conversion shall be authorized by the approval by the members or, if there is more than 1 class or group of members, then by each class or group of members, in either case, by members who own more than 50 percent of the then current percentage or other interest in the profits of the domestic limited liability company owned by all of the members or by the members in each class or group, as appropriate. (l)Notwithstanding 18-803(a) of this title, unless otherwise provided in the limited liability company agreement, a manager associated with a series who has not wrongfully terminated the series or, if none, the members associated with the series or a person approved by the members associated with the series or, if there is more than 1 class or group of members associated with the series, then by each class or group of members associated with the series, in either case, by members who own more than 50 percent of the then current percentage or other interest in the profits of the series owned by all of the members associated with the series or by the members in each class or group associated with the series, as appropriate, may wind up the affairs of the series; but, if the series has been established in accordance with subsection (b) of this section, the Court of Chancery, upon cause shown, may wind up the affairs of the series upon application of any member or manager associated with the series, or the member's personal representative or assignee, and in connection therewith, may appoint a liquidating trustee. For purposes of the immediately preceding sentence, the term "distribution'' shall not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business pursuant to a bona fide retirement plan or other benefits program. Then, your business owners will need to voluntarily and formally trade in their ownership in your previous entity for ownership shares in the new entity. The conversion procedure is codified primarily in Section 18-214 of the Delaware Code (Del. Do I need to attach the plan of conversion? Conversion Information Over 140 Business Filings, Name Reservations, and Orders for Certificates of Status and Certified Copies of Corporations, Limited Liability Companies and Limited Partnerships available online. To learn more, see our Privacy Policy or read about Privacy by Default. The next step is to draft and file the certificate of conversion. (f)Upon the filing in the office of the Secretary of State of the certificate of conversion to non-Delaware entity or upon the future effective date or time of the certificate of conversion to non-Delaware entity and payment to the Secretary of State of all fees prescribed in this chapter, the Secretary of State shall certify that the limited liability company has filed all documents and paid all fees required by this chapter, and thereupon the limited liability company shall cease to exist as a limited liability company of the State of Delaware. I want to re-domesticate or convert my out-of-state entity to a Texas entity of the same type. If you have specific questions about any of these topics, seek the counsel of a licensed professional. However, a Texas nonprofit corporation may not convert to a for-profit entity. In addition, the certificate of formation must provide the . However,statutory conversionsarent allowed in every state, as there are some states that require entrepreneurs to take different and more complicated measures to convert their businesses. In general, the tax consequences associated with converting from a corporation to an LLC will be complicated. Laws, c. 327, 8; 80 Del. Get free resources and everything you need to know to start, run, and grow your small business. Certificate of Conversion from a Delaware Limited Liability Company to a Non-Delaware Entity Dear Sir or Madam: Enclosed please find a form for a Certificate of Conversion from a Delaware Limited Liability Company to a Non-Delaware Entity. Keep in mind that Delaware's conversion statute states makes clear not only that all of the corporation's property, as well as debts, are automatically transferred to the new LLC, but also that all rights of creditors against the corporation continue against the new LLC, all corporate debts and liabilities continue in force against the new LLC, and all legal actions involving the corporation "remain vested in" the new LLC. (c)The certificate of conversion to limited liability company shall state: (1)The date on which and jurisdiction where the other entity was first created, incorporated, formed or otherwise came into being and, if it has changed, its jurisdiction immediately prior to its conversion to a domestic limited liability company; (2)The name and type of entity of the other entity immediately prior to the filing of the certificate of conversion to limited liability company; (3)The name of the limited liability company as set forth in its certificate of formation filed in accordance with subsection (b) of this section; and. Heres what you need to know: Absolutely. The following provides details of the paperwork and fees required for converting an LLC to C Corp. Was this document helpful? Consult the Texas Business Organizations Code and/or a private attorney to draft the required instrument. to a specified future date within 90 days of the date the instrument is signed, or. Hire the top business lawyers and save up to 60% on legal fees. STATE . A limited liability company shall not make a distribution with respect to a series that has been established in accordance with subsection (b) of this section to a member to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of such series, other than liabilities to members on account of their limited liability company interests with respect to such series and liabilities for which the recourse of creditors is limited to specified property of such series, exceed the fair value of the assets associated with such series, except that the fair value of property of the series that is subject to a liability for which the recourse of creditors is limited shall be included in the assets associated with such series only to the extent that the fair value of that property exceeds that liability. Laws, c. 360, 9; 70 Del. FROM A LIMITED LIABILITY COMPANY TO A CORPORATION . The process is fast, and the required paperwork for the conversion is easy to understand. Steps to Convert an LLC to C Corp The following are steps involved in converting an LLC into a C Corp The first step is to make sure that the laws that will be used in administering the organization post-conversion allow for a conversion of the business into a C Corp. Produce LLC Consent and Agreement as well as a Plan of Conversion. The certificate of conversion to non-Delaware entity shall state: (1)The name of the limited liability company and, if it has been changed, the name under which its certificate of formation was originally filed; (2)The date of filing of its original certificate of formation with the Secretary of State; (3)The jurisdiction in which the entity or business form, to which the limited liability company shall be converted, is organized, formed or created, and the name of such entity or business form; (4)The future effective date or time (which shall be a date or time certain) of the conversion if it is not to be effective upon the filing of the certificate of conversion to non-Delaware entity; (5)That the conversion has been approved in accordance with this section; (6)The agreement of the limited liability company that it may be served with process in the State of Delaware in any action, suit or proceeding for enforcement of any obligation of the limited liability company arising while it was a limited liability company of the State of Delaware, and that it irrevocably appoints the Secretary of State as its agent to accept service of process in any such action, suit or proceeding; (7)The address to which a copy of the process referred to in paragraph (e)(6) of this section shall be mailed to it by the Secretary of State. 18-214. 2 DE Code 18-214 (2014 through 146th Gen Ass), This site is protected by reCAPTCHA and the Google, There is a newer version of the Delaware Code, CHAPTER 18. Your use of this website constitutes acceptance of the Terms of Use, Supplemental Terms, Privacy Policy and Cookie Policy. Laws, c. 341, 9, 10; 72 Del. Stay compliant all year without having to do it yourself. (i)Notwithstanding 18-607(a) of this title, a limited liability company may make a distribution with respect to a series that has been established in accordance with subsection (b) of this section. Complete the formation document for the new entity type (e.g., Articles of Incorporation or Articles of Organization). See how we work and the ZenBusiness difference. The Division of Corporations accepts MasterCard, Visa and American Express for the payment of fees. The Delaware Secretary of State makes available a PDF file containing blank templates of the certificate of conversion and certificate of formation, along with a form letter providing limited instructions regarding filing of the certificates. All of the paperwork and procedural steps to start a limited liability company in Delaware can be done online using Nolo's Delaware Online LLC Formation application. It takes about two weeks to process a Certificate of Conversion and a Certificate of Incorporation in Delaware. Laws, c. 105, 29, 30; 77 Del. (e)If a limited liability company shall convert in accordance with this section to another entity or business form organized, formed or created under the laws of a jurisdiction other than the State of Delaware, a certificate of conversion to non-Delaware entity executed in accordance with 18-204 of this title, shall be filed in the office of the Secretary of State in accordance with 18-206 of this title. However, as this type of conversion will not change the basic elements of how your business will be taxed going forward, you should investigate closely how it would benefit the business, other than by providing a more flexible management structure. The fee for filing the Certificate of Formation is $90.00. A key point to keep in mind is that converting a C corporation to an LLC taxed as a partnership often results in a large tax bill. However, if you attach a certificate of formation form to your merger instrument, please note that the certificate of formation must contain additional statements that are not included in the secretary of state forms. Choose the right business structure (formation) for you. Georgia Code 14-3-1121 (2019) - Certificates of conversion Yes. PDF Delaware Division of Corporations 401 Federal Street - Suite 4 Dover Delaware LLC Conversion: Everything You Need to Know - UpCounsel Laws, c. 287, 19; 79 Del. The filing fee for converting a Texas limited liability company to a Delaware limited liability company is $300. PDF The attached form is designed to meet minimal statutory filing If you have any questions specific to your LLC, its a good idea to consult a business attorney or CPA. What are the most common reasons for rejecting a merger or conversion filing instrument? And, while they are not a substitute for expert tax advice, you should also consider looking at Tax Savvy for Small Business, by Frederick Daily (Nolo), and Legal Guide for Starting & Running a Small Business, by Fred Steingold (Nolo). What is the quickest way to get my instrument filed? (h)When any conversion shall have become effective under this section, for all purposes of the laws of the State of Delaware, all of the rights, privileges and powers of the limited liability company that has converted, and all property, real, personal and mixed, and all debts due to such limited liability company, as well as all other things and causes of action belonging to such limited liability company, shall remain vested in the other entity or business form to which such limited liability company has converted and shall be the property of such other entity or business form, and the title to any real property vested by deed or otherwise in such limited liability company shall not revert or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of such limited liability company shall be preserved unimpaired, and all debts, liabilities and duties of the limited liability company that has converted shall remain attached to the other entity or business form to which such limited liability company has converted, and may be enforced against it to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by it in its capacity as such other entity or business form.