Many small businesses form as one type of entity (LLC, partnership, corporation, etc.) initially and then realize, either from a tax standpoint or because investors are requiring it, that they need to convert into a different type of entity. This scenario often plays out when a startup starts soliciting investment. For example, one such client of ours started out as a limited liability company, only to be told by a potential investor that they needed to convert into a corporation before the investor would consider putting money in.
The conversion process in Missouri is relatively simple, albeit a bit of a waiting game. If converting from an LLC to a corporation, all that is required is consent from the members of the LLC, a written Certificate of Conversion authorizing the conversion, and new Articles of Incorporation to establish the official corporation. Converting from other entity types is relatively similar. The name of the original company may, however, need to change. If the original LLC was named "ABC, LLC," it could convert into "ABC, Inc. or ABC, Co." However, if "ABC, Inc." or "ABC, Co." is already taken, the company will have to reincorporated under a different name, which may be frustrating. From there, all of these filings are filed with the Secretary of State's office, either online or in person.
Filing online, while easy, takes a long time. Generally speaking, it can take up to six weeks for an entity to convert when filed online. However, if the paperwork is physically brought to the Secretary of State's office in Jefferson City, they can process the conversion the same day. For an extra fee ($250.00 per hour), The Taormina Firm will hand-deliver the converting paperwork in Jefferson City to accomplish this same day.
If you have any questions about entity conversion, please feel free to contact The Taormina Firm.
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