Legal Question in Business Law in Delaware

Conversion to an LLC

In April, a friend in Oregon and I in Texas incorporated in the state of Delaware. I have since heard of the LLC entity and think that is what we need instead. What is the cheapest way to convert to an LLC? We have little money and are only in development stage of our dollmaking company. We have already shelled out $300 to an indifferent lawfirm in Delaware who is acting as our agent. Your suggestions?


Asked on 6/15/00, 3:25 pm

1 Answer from Attorneys
Charles Aspinwall Charles S. Aspinwall, J.D., LLC

Re: Conversion to an LLC

A Limited Liability Company is valuable for several reasons, particularly to a start-up venture, because of straight-through tax treatment and the finite liability of non-managers who wish to limit their investments.

There is no way to "convert" a corporation from the traditional style to an LLC, the basic operating structures are different. You will have to reinvent your company into an LLC by filing original documents.

Most small businesses will not find any advantage to incorporating or organizing an LLC in a distant state. It is usually better to stay at home. One cannot avoid paying taxes in a retail setting by incorporating in another state which has a more favorable tax picture. One pays tax in the state where one does business.

Email us for further information about LLC's.

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Answered on 8/07/00, 8:37 am


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