Legal Question in Business Law in California

There is no provision in California law for a non-profit LLC. For many tax purposes, an LLC is treated as a partnership. As a result, there are a few instances in which an LLC is eligible for treatment as though it were a tax-exempt organization IF all of its managing members are non-profit corporations and/or associations. In general, however, neither an LLC or a general partnership is a suitable vehicle for a nonprofit entity, either from the standpoint of exemption from California franchise taxes or qualification as a 501(c)(3) organization under the Internal Revenue Code.

I recommend sticking with well-established entity choices such as the non-profit corporation or non-profit association, both provided for in California statutes.

As Mr. Whipple notes, there is no provision for a non-profit LLC. It sounds as though you would like to change your tax treatment based on the way your business has developed. You may consider starting a new non-profit corporation; your LLC can may then donate its assets to the non-profit and then dissolve if necessary. If you would like more information, please feel free to contact me.

Regards,

Bryan Becker

Becker Attorneys

877.201.8728

www.becker-attorneys.com

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