Legal Question in Business Law in Massachusetts

Re: Sole proprietorship become part of new LLC?

Yes, this is frequently done -- you simply make a capital contribution of the assets of the sole proprietorship subject to existing liabilities. You should consult with a CPA to ensure that you elect the most favorable tax treatment for your LLC.

Best wishes,

LDWG

Re: Sole proprietorship become part of new LLC?

The response made by Attorney Graves is correct. In addition, however, you need to inform all of the creditors of the sole proprietorship that you have changed business format to an LLC and that as of a certain date, all billing should be to the LLC. Once you have effectuated the merger, if Company A goes by a different name, you would need to file a d/b/a certificate in the town/city in which you operate showing that the LLC is now doing business as Company A. There are a number of other mechanical matters that would need to be addressed (ie. new checking account etc.). I would be pleased to discuss this transaction with you at a time of your convenience. Barry

Re: Sole proprietorship become part of new LLC?

Yes, after consulting your accountant to be sure you have elected the most favorable tax treatment for Company B, LLC, you need to inform all of the creditors of Company A that you have changed to an LLC and that as of a date certain, bills should be sent to the Company B, LLC. Also, if Company A has a different name, you should file a d/b/a certificate in the town or city clerk's office where you do business stating that the LLC is now doing business as Company A.