Is it possible to convert a Sole proprietorship to LLC?
If yes, what is the process.
Appreciate
thanks
yes
form an LLC
contribute assets either as capital contributions or “sell” them to the LLC.
everything continues as before.
I have four duplexes, and now I’m thinking that I better form an LLC to protect myself. The properties are in my name, so how do I get them in an LLC? Is this something that is best handled by going through a Lawyer?
Establish an LLC. $500 give or take depending on your state.
(Best) refinance the properties to the LLC.
(Next best) Place the properties in a trust with LLC as beneficiary.
(3rd best) Deed the properties to the LLC and assign the mortgages. Note that this may trigger DOSC if the bank finds out.
No reason to have to get lawyered up for this.
When you create the LLC, is there anything specific you need to include in the operating agreement to make sure the LLC is formed ‘right’? Can we just use a standard operating agreement that we find online or is there one that people normally use for a single manager run LLC that is own by a single person?
A lot of mortgage lenders dont refinance into the LLCs. How do you convince them to do so?
2nd question first: find one that does. email me if you can’t find one.
First question: I use a management agreement that was originally drafted by an atty and I modify the appropriate sections as needed. Online stuff can be good or crap, depending on the source. There’s a lot of bad info out there.
The management agreement is important, but more important is to run the LLC appropriately: no comingling, documentation, arms length transactions with the members, etc. to avoid having the LLC becoming an “alter ego.”
I have an EIN already do i have to apply for another if i convert to LLC
Thanks
yes. and file a “final” schedule C for the sole proprietorship.
you’re not really “converting” but establishing an LLC and transferring or selling assets.
regarding the operating agreement, is this officially recorded anywhere or is it just kept in your office and used whenever required such as to open up a banking account?
It’s an agreement between the LLC and manager, authorizing and outlining the manager’s duties. It’s not recorded and not really used unless something comes up.