The laws of every state permit the creation of various types of business organizations. One type of business organization, the limited liability company (LLC), combines the limited liability benefits of a corporation with the pass-through federal taxation and relaxed filing requirements of a partnership. Converting an existing partnership to an LLC requires filing a document, called the articles of organization, with the state agency responsible for registering business organizations. Some states require a certificate of formation rather than the articles of organization, but the information needed and the filing process is essentially the same.
Download the articles of organization form from the website of the state agency responsible for registering business organizations. Most states will require you to use their official form for filing the articles of organization.
Read More: How to Convert a Partnership Into an LLC
Fill out the articles of organization form. Typically, you will need to provide a name and address for your new LLC. You must designate a registered agent, which is a person or business that will receive service of process if your LLC is ever sued or subpoenaed. Depending on the state, you must indicate whether the day-to-day management of your LLC will be vested in persons with or without an ownership stake in the LLC. You must sign and date the articles of organization.
File the articles of organization. While all states allow for the filing of the articles of organization by mail, some states permit you to file online. The filing fee for an LLC varies by state, but can be anywhere from $50 to $350.
Transfer business assets from the partnership to the LLC. After having your LLC approved by the appropriate state agency, you must transfer partnership assets to the new LLC. The easiest way to accomplish this is by drafting a bill of sale. List all of the assets of your partnership and their values. Indicate that the assets are being transferred to the new LLC. Sign and date the bill of sale.
Shut down the partnership. If your partnership is registered with a state agency responsible for registering business organizations, you will need to file a Certificate of Cancellation. The form for canceling a partnership can generally be found on the website of the state agency. You will typically need to provide the name of the partnership and the reason for dissolution. Sign and date the Certificate of Cancellation. Additionally, when you file your quarterly or annual tax returns for your partnership, indicate on the tax return that this is the “final” return for the partnership.
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