How to Convert Your LLC to a Corporation

The state of Delaware’s Division of Corporations allows for changes to a corporate entity via amendments, restated certificates, designations or conversions. Changes can be made at any time throughout the life of the entity.

For example, if you want to convert a Delaware Limited Liability Company (LLC) to a General Corporation, you can. There are many reasons why owners of an LLC may choose to change the entity to a corporation.

In my experience, however, the reason is almost always that the company needs to be able to issue shares of stock in order to bring on investors or raise venture capital.  

Delaware corporate law specifically states:

“Any other entity may convert to a corporation of this State by complying with subsection (h) of this section and filing in the office of the Secretary of State”

(§ 265 Conversion of other entities to a domestic corporation)

Filing Your Conversion from Delaware LLC to Corporation

The filing requires two properly completed and signed documents be submitted to the state of Delaware:

1. Certificate of Conversion
2. Certificate of Incorporation

A Certificate of Conversion is the document filed to effectively change from one entity type to another with Delaware’s Division of Corporations. The filing must specifically state the following:

• The original LLC name
• Date and State the LLC was first created. 
• The name of the corporation mentioned in the accompanying Certificate of Incorporation.  

The Certificate of Incorporation is required to create the corporation. This document must have the following information listed:

• Company name
• Registered Agent’s name
• Registered Agent's address
• Number and type of stock authorized
• Par value of the stock
• Incorporator information

Lastly, the $300 Delaware Franchise Tax for the LLC must accompany the filing for the current and following years that are due. For instance, an LLC converting to a corporation during the year 2023 would owe the $300 tax for the year 2022 (if not already paid by the June 1 deadline) AND $300 at the time of the filing (for the year 2023). It would then owe its annual corporation Franchise Tax on March 1, 2024 (for the year 2023). Effectively, it is taxed twice for the year of the conversion because it operates as both an LLC and a corporation for some amount of time during that calendar year.

Once the Certificate of Conversion and the Certificate of Incorporation are executed and the Delaware Franchise Taxes are paid, the filing can be submitted to the state.

The state of Delaware will approve the filing by affixing a time-date stamp to the documents. Once the filing is completed, the entity will be a valid Delaware corporation with a legal existence.   

However, keep in mind that the Delaware Franchise Tax will no longer be $300, nor will it be due on June 1 of each year. Franchise Tax for a corporation is due annually on March 1, and the amount due will depend on the number of authorized shares of stock in your company.

A Delaware corporation’s Franchise Tax/annual report fees are based on the number of shares the corporation has authorized. A company with 1-5,000 authorized shares is assessed a $225 Franchise Tax fee; a company with 5,001-10,000 authorized shares is assessed a $300 Franchise Tax fee; and a company with more than 10,001 will be assessed a minimum fee of $450 for Franchise Tax.

Our Franchise Tax calculator can help determine what a company’s annual Franchise Tax will be if it is a corporation with more than 10,001 shares of stock.

Please feel free to call our team of experienced corporation specialists at 800 345 2677, Ext. 6911  with any questions about the conversion process. We would be glad to assist.