The most common and initial form of protection for owners in a business structure is the LLC. As the standard, forming an LLC is easy and relatively inexpensive; it also requires very little of its members in most circumstances. That’s why it’s become one of the most popular ways to add a layer of protection to your Georgia company.
Over time, however, such as after a strategy session with an Atlanta business lawyer (hint hint) that you need to evolve your previous Georgia LLC into a different kind of business structure, like a corporation. This is a process referred to as “statutory conversion” and while it sounds complicated, just involves the completion of the right paperwork and procedures. There’s no doubt you want to fill out all that paperwork accurately, but it’s not as scary as it sounds.
Georgia Code enables you to go through this process by automatically moving your assets and liabilities that belong to the LLC into a new corporation. Note that it’s a common misconception that you’d need to form the new business first. Only one entity for your business is involved in the conversion process. You also don’t need to fully dissolve the existing Georgia LLC unless you want to; most business owners choose to show that there is a continuation of the business existence when it moves over to a corporation.
Although you technically can handle some of the aspects of converting your corporation, it’s strongly recommended that you get an attorney to dig into the details so that it’s done properly. Any other LLC members must agree to the conversion before you can move forward, but once that happens, you can file new articles of incorporation and a certificate of conversion with the state of Georgia.
The one exception to all-LLC member approval? If your operating agreement details otherwise that a vote of the majority allows for changes in the organization.
On the certificate of conversion, you’ll need to have some key business details on hand to complete the paperwork in full. This includes the LLC name, a statement about the new incorporation articles, the state in which the original LLC was formed, the formal effective date of the new conversion to a corporation, and a statement that the Georgia LLC members have elected to instead become a corporation.
Unlike other business forms that have a template or blank version available, that’s not the case with a GA conversion request for your business. This means you’ll need to include the above information in your own certificate. If you draft it on your own, get an attorney’s eyes on it.
Of course, you’ll have possible tax implications of altering the type of your business. It’s probably the big reason why you thought about going from Georgia LLC to a corporation anyways. Make sure you’ve thought through what this means for the company in addition to the individual members especially if you are evolving into a C or an S corp. Getting all the paperwork and new processes in place early on will make it that much easier for you and other owners & leaders in the company.