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A business entity conversion, or change in business form, is the legal process of converting an existing business entity from one legal form into another. Most of the time, a business will change from a less complex structure like a partnership to a more complex structure like a limited liability company.

An entity conversion is a filing that is made with the state of incorporation that allows a company to change from one business type to another.

A conversion is a filing that is made with the state of incorporation allowing a company to change from one business type to another.

Entity Conversions Please note that the converted entity may be taxed differently and may have different organizational rules and requirements than the converting entity. The converting entity ends its tax year on the date of conversion, while the converted entity does not begin its tax year until the following day.

This is because LLCs are taxed on a pass-through basis, meaning the LLC's profits are ?passed through" to the individual LLC members, to be taxed in their hands only. By converting your corporation into an LLC then, you gain the advantage of pass-through taxation and don't have to worry about double taxation.

First, you must fully dissolve the corporation. Then, you form a new LLC, and all assets are transferred to the new company before the transition is complete. You need to know the positives of converting a corporation to an LLC and the cost of changing from a corporation to know if it makes sense for your business.

The Certificate of Conversion, also known as the Articles or Statement of Conversion, is the document that officially puts your business entity conversion into effect. This conversion document includes basic information about both your converting and converted entities.

Three methods of changing entity forms Three ways to change from one form of entity to another are dissolution/formation, inter-entity merger, and statutory conversion. Dissolution/formation ? In this method, the original entity is dissolved and a new entity is formed.

Once the LLC is classified for federal tax purposes as a Corporation, it can file Form 2553 to be taxed as an S Corporation.To change the actual entity structure you have to formally change the LLC to a Corporation with the formation state.

Converted-Out: The business entity converted to another type of business entity or to the same type under a different jurisdiction as provided by statute. The name of the new entity can be obtained by ordering a copy of the filed conversion document containing the name of the new entity, or by ordering a status report.