From C-Corp to LLC: A Step-by-Step Guide
Learn how to convert your C-Corp to an LLC, including the benefits and steps involved in the process.
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From C-Corp to LLC: A Step-by-Step Guide
Are you a business owner considering converting your C-Corp to an LLC? This guide will walk you through the process, highlighting the key differences and benefits of each business structure.
What is a C-Corp?
A C-Corp, or C Corporation, is a type of business structure that is owned by shareholders and is taxed as a separate entity. C-Corps are popular among large businesses and startups, as they offer limited liability protection and the ability to raise capital through stock sales.
What is an LLC?
An LLC, or Limited Liability Company, is a type of business structure that combines the benefits of a corporation and a partnership. LLCs are owned by members, who have limited liability protection and are taxed on their personal income.
Why Convert from a C-Corp to an LLC?
There are several reasons why a business might consider converting from a C-Corp to an LLC. For example:
- Reduced taxes: LLCs are generally taxed at a lower rate than C-Corps.
- Increased flexibility: LLCs have more flexibility in terms of ownership structure and management.
- Reduced administrative burden: LLCs have fewer requirements and less paperwork than C-Corps.
Step-by-Step Guide to Converting from a C-Corp to an LLC
File articles of dissolution with the state.
File articles of organization with the state.
Update your business license and registration.
Update your tax status with the IRS.
Update your business bank accounts and credit cards.
Update your business insurance policies.
Update your business contracts and agreements.
Conclusion
Converting from a C-Corp to an LLC can be a complex process, but it can also offer significant benefits for your business. By following these steps, you can ensure a smooth transition and take advantage of the benefits of an LLC.