the major reason why businesses change from sole proprietorships to other forms of ownership is to This is a topic that many people are looking for. bluevelvetrestaurant.com is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, bluevelvetrestaurant.com would like to introduce to you How to Convert a Sole Proprietorship to an LLC – All Up In Yo Business. Following along are instructions in the video below:
“Everybody i m attorney aiden. Kramer. With the law office of aiden kramer in colorado colorado and you re watching all up in your business. I m really excited about episode.
Because it s been requested by a lot of you a lot of you asked me to make a video on this topic and i made one a few weeks ago. But i didn t like it it was boring and i just wasn t on the top of my game. At the time so i scrapped it and decided to redo it but here we are together again. And what i m going to be talking about is how you transition from a sole proprietorship to an llc.
If you ve been operating a business as a sole proprietorship and you decide that for liability. Reasons tax purposes. Whatever it is that you want to transition your business to an llc. How do you go about doing that the good news is that it s really not that different from just starting your business from the beginning as an llc.
The process and the steps really aren t that different from just normally forming an llc as you would with any other business first of course you need to form the llc that s done by filing a document with your state s secretary of state in colorado. It s called articles of organization that you file in some states..
It s called the certificate of formation whenever. It s called you file that document and that s what creates and forms the llc if your sole proprietorship was operating under a trade name or a dba and you want to continue operating under that dba with your llc. Then you ll need to refil. The statement of trade name or the dba paperwork.
So that it s clear that that trade name is a trade name of the llc because when you re operating as a sole proprietor. The dba is the dba of your sole proprietorship and instead. Now you want it to be a dba of your llc. So in most states you would need to withdraw the current trade name registration and then refile it with your llc.
If your llc is going to be operating under this name name that your sole proprietorships dba. Was then you don t need to worry about redoing. The trade name. Because the llc s name is the same as the trade name.
So you don t need a trade name or a dba. If the names are going to be the same you just operate under your llc s name you may need to get an ein or a tax identification..
Number. As well through the irs. You may have had an ein for your sole proprietorship. If your sole proprietorship had employees or if your bank required it.
But now that you re changing to an llc that irs requires that you get a new ai n. Because it s a new entity. So you would need to apply for that new ein and then change or update. Your bank s information.
So they have the llc s name and the new tax id. Number. If your sole proprietorship was required to have any sort of permits or licenses maybe your city required that you have a business license. You ll want to contact your city and let them know that you re now operating as an llc and they may need the new ein they may not make you make any changes.
But you ll need to contact the city. The county whatever jurisdiction..
It was that is controlling this license or permit contact them and find out what if any changes would need to be made so that that permit or the license applies to the llc now instead of the sole proprietorship. The one thing that is different in this instance. Then if you re just forming an llc from the beginning of your business s life is that you may need to review and redo a few contracts. If your sole proprietorship had contracts with customers or service providers.
Anything like that you ll want to change those contracts. So that it s the llc who is the party to the contract instead of the sole proprietorship because when you signed that contract as a sole proprietor. It was you who was signing the contract essentially. But now as an llc.
It s the llc who is a part to the contract so the contract can be amended or renewed. Then you want to amend or renew. It as the llc being the party to the contract if you can assign the contract. Then you can assign your interest in it to the llc.
All that s going to depend on what the contract says about making changes to it. But if you can you want to redo those contracts..
So it s obvious and clear that it s the llc who s now signing the contract and not you as a sole proprietor and then moving forward making sure any new contracts or agreements are signed by the llc rather than the sole proprietorship. But really that s it that s really the only difference between transitioning. A sole proprietorship to an llc and just forming an llc is making sure those contracts reflect the llc. So thank you to everybody who requested that i make a topic on that as always if there s a topic that you would like me to talk about or put.
A video up about please comment them or shoot me an email with that request and i ll put it on the list and try to get to it when i can if you re in colorado and are looking for assistance with moving your sole proprietorship to an llc or starting. A new business as an llc feel free to contact me my phone number and email are below be sure to subscribe to my channel. So you don t miss any exciting episodes of all up in your business. Thank you all so very much for watching i m aiden.
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