Can a company start out as a sole proprietorship and become an LLC later on or must it start out as an LLC?

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Can a company start out as a sole proprietorship and become an LLC later on or must it start out as an LLC?

Asked on December 8, 2011 under Business Law, Oklahoma

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

The company doesn't "become" an LLC; however, you can create an LLC, then transfer all the sole proprietorship's assets (including name, intellectual property, accounts receivable, inventory, etc.) and contracts (including leases, service agreements, etc.--subject only to any non-assignment clauses in those agreements) to the LLC. You don't even need to sell the assets to the LLC; you can make them your inivestment (an investment "in kind") in the LLC and so use them to support your ownership and capital account. An accountant could help you value them correctly for that purpose, and any business or contracts attorney could set up the LLC and handle the paperwork transferring assets.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption