Can I Convert a Corporation Into an LLC?

The limited liability company (LLC) and corporation are both formal business entities with plenty of their own advantages and disadvantages.

When you’re first forming your business, one or the other might seem like the right fit, but as your business grows and matures, you may realize that the other entity type would better suit your company.

This raises an important question. If you initially choose the corporation entity type, can you convert that corporation into an LLC down the line? And if so, what does this process look like?

Quick Note: If you’d rather simply dissolve your corporation and form a new LLC, there are plenty of online LLC services (like ZenBusiness) that can take care of the paperwork for you.

What Is an LLC?

First off, let’s quickly outline what an LLC is. A limited liability company mixes elements of sole proprietorships, general partnerships, and corporations, essentially giving entrepreneurs the best of these worlds.

LLCs are typically taxed similarly to sole proprietorships and general partnerships, in that the owners include any company profits or losses into their personal returns — the LLC itself does not owe income taxes. An LLC may also elect to be taxed like a corporation, although this is not a very common option.

There are similarities to corporations too, especially when it comes to financial responsibilities. In an LLC, the owners or members are not usually personally accountable for the financial status of the business (see owners or members definition). This means that if someone sues your LLC, your personal assets are generally protected from claims that arise solely because you are a member or manager. That protection has limits. It does not cover a debt you personally guarantee in writing, your own wrongful conduct, or a case where a court applies alter ego principles because the business was not kept separate from your personal affairs.

In short, LLCs are so popular because they provide a variety of legal protections for your business, while also enhancing your company’s credibility.

What Is a Corporation?

A corporation is another type of formal business entity, and it’s the entity small business owners choose when they want to issue stock. Technically, it isn’t the only structure in America that can have shares outstanding, since state law also recognizes joint-stock associations and unincorporated trusts with shares. But among the entity types you’d realistically pick for a closely held business, only the corporation issues stock. The corporation’s stockholders own shares of stock. Those shares are their own personal property and represent an ownership interest in the company, which essentially makes the stockholders the owners of the corporation. The corporation itself owns its assets, which is why property stays vested in the entity through a conversion instead of passing through the owners.

Unlike an LLC, corporations aren’t as flexible when it comes to taxation, and they also have much more rigid managerial structures that owners must adhere to. Furthermore, corporations are required to keep extensive records. They typically hold meetings for both their directors and their shareholders and take detailed notes at each one, though many corporate actions can be taken by written consent instead. An LLC is generally free of those meeting and minutes formalities, but it isn’t free of record keeping. State LLC laws commonly require you to keep a current list of members with their contributions and profit shares, your formation documents and operating agreement, and several years of tax returns and financial statements. Check what your state requires.

In addition to the ability to issue stock, corporations have some other advantages over the LLC as well. One of these advantages is the corporation’s ability to attract investments in the form of venture capital. Venture capitalists hardly ever invest in pass-through entities of any kind, so if you’re seeking VC investments, the corporation is a vastly superior entity type compared to the LLC.

The other advantages of a corporation center around the fact that it is far more established in the courts. The corporation as an entity has been around for centuries, and therefore court systems have had plenty of time to establish precedent regarding how they’ll be treated.

That said, the corporation isn’t uniform across states any more than the LLC is. Every state has its own corporation act, and details such as the shareholder vote needed to approve a conversion differ from one state to the next, so don’t assume corporate procedure you learned in one state carries over unchanged to another. The corporation’s long history of court precedent is still the real advantage, because when it comes to court cases, certainty is preferred over uncertainty, and it’s easier to follow rules the courts have already spelled out.

How Can I Convert a Corporation Into an LLC?

First and foremost, yes, you can convert a corporation into an LLC. As for how you can do this, there are two main options. The simpler option is to perform a statutory conversion, which is a long-established mechanism that most states now authorize, although a handful still have no corporation to LLC conversion statute and leave you with the merger route instead (as of August 2026). Confirm what your own state allows with your Secretary of State or equivalent business filing office before you commit to a statutory conversion (see statutory conversion definition).

This process has some variance from state to state, but in general, it starts with the corporation’s directors agreeing to convert to an LLC and drafting a conversion plan. Then, those directors need to provide the company’s stockholders with the plan so they can vote on it. If the majority of these stockholders vote in approval of the conversion plan, the corporation may then file a certificate of conversion.

They will also need to prepare and file the articles of organization, which is the organizing document used to form an LLC, along with completing any other relevant requirements in that state. The document’s name and the filing office both vary by state. Some states call it articles of organization, and others call it a certificate of formation. The filing office may be the Secretary of State, a Department of State division of corporations, or a corporation commission, so check your own state’s portal. If you complete all of these steps, your corporation’s stockholders will now be member/owners of your LLC. In addition, the assets held by your corporation will transfer to your LLC.

If your business operates in a state where statutory conversions are not allowed, then you’ll have to perform a statutory merger, which is a considerably more complex method than a statutory conversion (see statutory merger definition). This option begins with the formation of a brand-new LLC, followed by a stockholder vote to approve a merger between the existing corporation and the new LLC.

Then, once the required vote is obtained, the stockholders’ shares in your corporation convert into ownership rights in the new LLC automatically under the approved plan of merger. Stockholders don’t each trade in their shares individually, and a holdout can’t block the deal. A stockholder who objects is generally limited to appraisal or dissenters’ rights, which means being paid fair value for their shares instead of refusing the exchange. Finally, to officially merge the two companies, you’ll need to draft and file a document usually called a certificate of merger with your state’s business filing office. That may be the Secretary of State, a Department of State division of corporations, or a corporation commission.

The big difference between a statutory merger and a statutory conversion is the fact that you have to create the new LLC as a distinct business structure before you can begin transferring assets or ownership rights, and you’ll also need to draft a merger agreement document to be able to exchange those corporate stocks for LLC ownership rights. Long story short, the statutory merger is a more time-consuming process than a statutory conversion.

Finally, there is one other way to convert a corporation into an LLC, which is the nonstatutory conversion (see nonstatutory conversion definition). This is a much more complex method than either a statutory conversion or a statutory merger, because your assets and ownership do not convert automatically from your corporation to your LLC.

We won’t go into too much detail about the nonstatutory conversion process because hardly anyone actually needs to use it these days, but in short, it usually starts with forming a new LLC, much like the statutory merger does. The other steps are typically similar too: a transfer of assets, a transfer of ownership, and a dissolution of the corporation. Unlike the statutory routes, no state statute lays out this sequence. It’s simply how these transactions are usually structured in practice.

As we noted though, while these steps are automatic transfers with a statutory merger, that isn’t the case with a nonstatutory conversion. Each step is documented separately, using instruments such as bills of sale, assignments, and assumption agreements, which can be complicated to draw up. Nonstatutory conversions should not be handled with the DIY route, and you should almost certainly hire a lawyer if you need to use this method. Fortunately, it’s rarely a necessity anymore.

Can I Hire a Service to Convert My Corporation Into an LLC for Me?

If this process sounds like more of a hassle than you’re willing to take on, or if you would rather have the peace of mind that each step was completed correctly by a professional, you do have some options. You could hire a business attorney to convert your corporation into an LLC, although this is an extremely expensive route that could see your expenses climb into the thousands of dollars.

Another option is to hire a business services company. While there aren’t nearly as many options as there are for forming an LLC, there are still several reputable companies offering business conversion services.

In Conclusion

While it’s not always the simplest process in the world, it is certainly possible to convert your corporation into an LLC. Depending on which state your business operates in, you will either use the statutory conversion or the statutory merger to complete this process.

We hope this article helped you enhance your understanding of how the corporation-to-LLC conversion process works!