How to Convert New Hampshire Corporation to LLC | The Ultimate Guide

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Convert New Hampshire Corporation to LLC

When it comes to business structures, corporations and limited liability companies (LLCs) are two of the most popular options in New Hampshire. Each business structure has advantages and disadvantages, so business owners must choose the best fit for their needs. There may come a time when a corporation realizes that converting to an LLC would be more beneficial. This comprehensive guide will walk you through Converting New Hampshire Corporation to an LLC, discussing the reasons for conversion, the steps involved, and any potential challenges you may face.

Webinarcare Editorial Team will help you easily understand the conversion process, so you must be guided by all the factors gathered in this article.

How to Convert New Hampshire Corporation to an LLC

Understanding Corporation and LLC in New Hampshire

Understanding the differences between corporations and LLCs in New Hampshire is essential for aspiring business owners and entrepreneurs. Both business structures offer distinct advantages and disadvantages, and comprehending their characteristics is crucial in making informed decisions.

Corporation

A corporation is a legal entity separate from its owners, known as shareholders or stockholders. It provides limited liability protection to its owners, meaning shareholders’ personal assets are typically shielded from company debts or liabilities. Corporations in New Hampshire have the advantage of being able to issue stock to raise capital, making them an attractive choice for businesses seeking significant investment opportunities. However, corporations also come with additional formalities, such as regular shareholder meetings and extensive record-keeping requirements.

Limited Liability Company (LLC)

A limited liability company (LLC) is a flexible business structure that combines the advantages of both corporations and partnerships. LLCs offer limited liability protection to their owners, called members, shielding their personal assets from business debts or lawsuits. Unlike corporations, LLCs do not require as many formalities as regular meetings or extensive record-keeping. This aspect makes LLCs more suitable for small businesses or entrepreneurs who prefer a less burdensome administrative and compliance structure.

Understanding the distinctions between corporations and LLCs is crucial to determine which structure aligns best with your business goals, resources, and needs in New Hampshire. By evaluating liability protection, taxation, ownership structure, and operational flexibility, entrepreneurs can make confident decisions when establishing their business entity in New Hampshire.

It is suggested that you speak with a legal professional before you begin converting your New Hampshire corporation to an LLC. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC in New Hampshire.

– WEBINARCARE EDITORIAL TEAM

How to Convert New Hampshire Corporation to an LLC

Converting a corporation to an LLC in New Hampshire involves several steps, which may vary depending on New Hampshire laws and regulations. Here is an outline of the steps required to convert New Hampshire corporation to an LLC:

Step 1: Research and Understand the Conversion Process

Before embarking on the conversion process, it’s crucial to research and understands the specific requirements and steps involved in converting a corporation to an LLC in New Hampshire. Familiarizing yourself with the relevant state laws, regulations, and necessary forms or filings will help ensure a smooth transition. 

The New Hampshire Secretary of State will often have valuable information about the conversion process, including required forms, fees, and filing procedures. Look for sections related to business entity conversions and corporation dissolution. In converting to an LLC, hiring an LLC Service in New Hampshire is best since it provides guidance and assistance.

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Step 2: Obtain Shareholder Approval

The second step in converting New Hampshire corporation to an LLC is obtaining approval from the corporation’s shareholders. This typically involves holding a shareholder meeting and voting on a resolution to approve the conversion. Be sure to review the corporation’s bylaws to ensure that the proper procedures are followed.

Step 3: Prepare and File a Plan of Conversion

New Hampshire requires that a Plan of Conversion be prepared and filed with the New Hampshire Secretary of State. This document outlines the terms and conditions of the conversion, including the name and structure of the new LLC, the conversion’s effective date, and any other relevant information. 

In terms of naming your New Hampshire LLC, you must adhere to the following when choosing your LLC’s name:

  • The name must include “Limited Liability Company,” “LLC,” or “L.L.C.“
  • The name cannot include words or phrases that imply the company is engaged in activities it is not authorized to conduct.
  • The name must be distinct from other registered businesses in New Hampshire.

In New Hampshire, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 120 days. You must file a name reservation application with the New Hampshire Secretary of State to keep the name. 

You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for New Hampshire DBA (doing business as). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA, you can file it in three methods, online, by mail, and in person filing.

However, before filing a DBA, you should know that you need to renew your DBA every five years, which costs $50.

Be sure to review New Hampshire’s specific requirements for a Plan of Conversion, Or you can hire the Best New Hampshire Registered Agent Services for easier processing. 

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Step 4: File Certificate of Formation for the New New Hampshire LLC

Along with the Plan of Conversion, you must file the Certificate of Formation in New Hampshire for your new LLC. This document establishes the new LLC that includes information such as the LLC’s name, Registered Agent, and management structure. 

For your LLC name, you must check the availability of your desired LLC name by searching the New Hampshire QuickStart Business Lookup‘s website.

Regarding your Registered Agent, he must receive and forward legal and tax documents on behalf of your LLC, such as service of process, state tax notification, and filing Annual Report. Your Registered Agent must have a physical address in New Hampshire and be available during regular business hours. The cost of Registered Agent in New Hampshire ranges from $50 – $150.

With all of the information included in the Certificate of Formation, you must pay the filing fee of $100, which you can pay with the New Hampshire Secretary of State.

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Step 5: Prepare the Operating Agreement

While not always required by state law, it’s a good idea to draft an operating agreement for the new New Hampshire LLC. This document outlines the LLC members’ roles, responsibilities, ownership percentages, and other important operational details.

The operating agreement should include the following:

  • The roles and responsibilities of members and managers
  • The process for admitting or removing members
  • The allocation of profits and losses among members
  • The procedure for making major decisions
  • The process for dissolving the LLC

Step 6: Notify Creditors and Other Interested Parties

Inform creditors, vendors, and other interested parties of the New Hampshire corporation’s conversion to an LLC. This can help ensure a smooth transition and maintain good relationships with those involved in your business.

Step 7: Update Tax Information

After converting to an LLC, you must update your tax information with the Internal Revenue Service (IRS) and the New Hampshire Department of Revenue Administration. This includes obtaining a new Employer Identification Number (EIN) for the LLC and updating any tax accounts or registrations.

To obtain an EIN for your New Hampshire LLC, you can apply online on the IRS website, by mail, or by fax. The online application process is the fastest and most convenient method, as you will receive your EIN immediately upon completing the application. There is no fee to obtain an EIN.

The application of an EIN in New Hampshire can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

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As an LLC in New Hampshire, your business may be subject to various state taxes and licenses, depending on the nature of your operations. Common taxes and licenses include:

  • Sales Tax: If your LLC sells taxable goods or services, register for New Hampshire sales tax permit and collect sales tax from your customers.
  • Employer Taxes: If your LLC has employees, you may be required to register for New Hampshire unemployment insurance and workers’ compensation coverage.

To ensure you comply with all applicable New Hampshire tax and licensing requirements, you can check out the New Hampshire Department of Revenue Administration and New Hampshire Small Business Taxes for more information.

Step 8: Update Licenses and Permits

Depending on the nature of your New Hampshire business, you may need to update or obtain new licenses and permits for your LLC. Check with the appropriate local, state, and federal agencies to ensure your LLC complies with all necessary regulations.

Reasons for Converting New Hampshire Corporation to an LLC

When considering the conversion of a corporation to a limited liability company (LLC) in New Hampshire, it is essential to understand the potential advantages that this change in business structure may provide. Here are some common reasons for converting New Hampshire corporation to an LLC:

  • Tax Flexibility: One of the primary reasons New Hampshire business owners opt to convert their corporation to an LLC is the tax benefits. While corporations are subject to double taxation, where the company’s income and the shareholder’s dividends are taxed, LLCs are considered pass-through entities. This means the business’s income passes through to the owners’ personal tax returns, avoiding double taxation.
  • Simplified Management Structure: Another advantage of an LLC over a corporation is its simplified management structure. New Hampshire Corporations have a more complex structure with shareholders, Five directors, and officers, while an LLC is managed by its members or designated managers. This can make decision-making and operations more straightforward for small businesses.
  • Reduced Administrative Requirements: New Hampshire LLCs generally have fewer administrative requirements than corporations, such as lower Annual Report fees and less stringent record-keeping rules. This can save New Hampshire business owners time and money, allowing them to focus more on growing their businesses.
  • Personal Asset Protection: Both corporations and LLCs offer limited liability protection, meaning the business’s debts and liabilities are separate from the owner’s personal assets. However, some business owners may prefer an LLC’s specific liability protections over a corporation.

Challenges and Considerations

When converting a corporation to an LLC in New Hampshire, it is essential to consider the potential challenges and implications of the conversion process. Here are some challenges and considerations to keep in mind:

  • Tax Implications: Although converting New Hampshire corporation to an LLC can offer tax benefits, it’s essential to consider the potential tax implications of the conversion. In some cases, the IRS may treat the conversion as a taxable event, which could result in additional taxes being owed. Consult with a tax professional to understand the tax implications of converting your corporation to an LLC in New Hampshire.
  • Legal and Financial Advice: Converting New Hampshire corporation to an LLC can be a complex process, and it’s essential to seek legal and financial advice to ensure that the conversion is done correctly in the business’s best interests.
  • Timing: Converting New Hampshire corporation to an LLC can take time, particularly if there are regulatory approvals or other requirements to be met. Be prepared for the conversion process to take several weeks or even months to complete.

Benefits of Converting New Hampshire Corporation to an LLC

Converting a corporation to a limited liability company (LLC) can benefit business owners. These advantages can include:

  • Tax Flexibility: One of the primary benefits of converting New Hampshire corporation to an LLC is the potential tax advantages. While corporations are subject to double taxation (the company’s income and the shareholder’s dividends are taxed), LLCs are generally considered pass-through entities for tax purposes. This means the business income passes through to the owners’ personal tax returns, avoiding double taxation.
  • Personal Asset Protection: Both corporations and LLCs offer limited liability protection, meaning the business’s debts and liabilities are separate from the owner’s personal assets. However, some business owners may prefer the specific liability protections provided by an LLC over a corporation, depending on the nature of their business and the potential risks involved.
  • Increased Flexibility in Profit Distribution: Unlike New Hampshire corporations, which typically distribute profits according to the percentage of shares owned, LLCs can offer more flexibility in profit distribution among members. This can be particularly advantageous for businesses with multiple owners who contribute differently to the company’s success.
  • Potential for Easier Transfer of Ownership: Depending on the specific rules and regulations in New Hampshire, transferring ownership of an LLC may be easier than transferring ownership of a corporation. This is an important consideration for business owners who plan to sell or transfer their business.

While the benefits of converting New Hampshire corporation to an LLC can be significant, it’s essential to carefully consider the potential challenges and implications of the conversion process.

FAQs

What is a limited liability company (LLC)?
An LLC is a legal entity that offers the limited liability protection of a corporation and the flexibility of a partnership.
How do I convert my New Hampshire corporation to an LLC?
You must file a certificate of organization with the New Hampshire Secretary of State.
Do I need to dissolve my corporation before converting to an LLC in New Hampshire?
No, dissolution is not required, but you must file a certificate of amendment to change the corporation’s name.
Can I convert my nonprofit corporation to an LLC in New Hampshire?
No, a nonprofit corporation cannot convert to an LLC. You must instead dissolve the nonprofit and form a new LLC.
Are there residency requirements for LLC members in New Hampshire?
No, there are no residency requirements for LLC members in New Hampshire.
Can a foreign LLC register to do business in New Hampshire?
Yes, as long as the LLC follows the required registration process.
What is the tax treatment of LLCs in New Hampshire?
LLCs have pass-through tax treatment in New Hampshire, meaning profits and losses are passed through to members’ personal income tax returns.
What is the filing fee for converting a corporation to an LLC in New Hampshire?
The filing fee for a certificate of organization is $100.
How long does it take to convert a corporation to an LLC in New Hampshire?
Processing times can vary, but generally, it takes about 7-10 business days for the state to approve your conversion documents.
What name requirements are there for LLCs in New Hampshire?
LLC names must include the words “Limited Liability Company,” “Limited Company,” or their abbreviations. Names cannot be the same or similar to existing business entities in the state.
Can a corporation continue pre-conversion lawsuits after converting to an LLC in New Hampshire?
Yes, the LLC can continue the lawsuit but will remain liable for any judgments or damages against the corporation.
What is the liability protection for LLC members in New Hampshire?
LLC members have limited liability protection in New Hampshire, meaning their personal assets are shielded from the business’s debts and obligations.
What accounting and bookkeeping records does an LLC need in New Hampshire?
LLCs in New Hampshire are required to keep accurate financial records, including lists of members, capital contributions, distributions, and profits and losses.
Can I convert my New Hampshire LLC back to a corporation in the future?
Yes, you can convert to a corporation by filing a certificate of amendment and following the required procedures.
Is there a minimum number of shareholders required for a New Hampshire LLC?
No, there is no minimum number of shareholders required for a single-member LLC.
What is a New Hampshire Registered Agent, and do I need one for my LLC?
A Registered Agent is a person or business entity designated to receive legal and official documents on behalf of an LLC. You must register with a New Hampshire Registered Agent to form your LLC.
What is a foreign registration statement, and when must I file it for my New Hampshire LLC?
A foreign registration statement is required when your LLC operates in another state or jurisdiction. You must file this statement in New Hampshire anytime your LLC conducts business outside of the state.
Is my LLC name protection guaranteed in New Hampshire?
No, name reservations and name filings are not guaranteed name protection in New Hampshire. You must ensure that your LLC name does not infringe on other intellectual property or business names in the state.
What is the deadline for registering my LLC with the New Hampshire Secretary of State?
You must register your LLC with the state within ten days of forming or transacting business in New Hampshire.
Are there annual reporting requirements for LLCs in New Hampshire?
Yes, New Hampshire LLCs must file the annual report with the state each year and pay the associated fee.
What are the penalties for failing to register an LLC in New Hampshire?
The penalties include civil fines, legal action against an LLC, criminal penalties, and liability for business debts and taxes.
Can a non-US resident register an LLC in New Hampshire?
Yes, a non-US resident can register and own an LLC in New Hampshire as long as the LLC meets all the state’s requirements.
How are New Hampshire LLCs taxed on out-of-state income or activities?
Members pay New Hampshire income taxes on pass-through income regardless of where they earn that income.
Are there specific New Hampshire LLC requirements for healthcare providers?
Yes, LLCs that provide healthcare services must follow specific requirements set by the Patient’s right to Know Act, including disclosure of specific information regarding healthcare providers.
Can an LLC have a physical location outside of New Hampshire?
Yes, the LLC can locate in another state or country, but it must still register and comply with all New Hampshire state regulations and business laws.
What is a restated certificate of formation, and do I need one for my LLC in New Hampshire?
A restated certificate of formation is a legal document that restates and consolidates the formation of an LLC. It is not required in New Hampshire, but you should file if there are significant changes to the LLC structure.
Can I change the ownership structure for my LLC after it has been filed in New Hampshire?
Yes, you can amend your LLC to change the ownership structure, but you must file the appropriate documentation with the state, and members must approve any changes.
What are the registered agent requirements for LLCs in New Hampshire?
LLCs in New Hampshire must have a registered agent with a mailing address in the state. The agent must be authorized to receive legal and official documents on behalf of the LLC.
What is the process for converting a New Hampshire corporation to a limited liability company?
The process involves amending the Articles of Incorporation to become Articles of Organization for an LLC and filing a Certificate of Conversion with the New Hampshire Secretary of State.
How long does it typically take to complete the conversion process in New Hampshire?
Processing times vary, but it often takes several weeks for the secretary of state to review and approve the filing.
Is it possible to convert a New Hampshire corporation to an LLC without dissolving the corporation?
Yes, the conversion process allows for the transfer of assets and liabilities from the corporation to the LLC without dissolution.
What are the advantages of converting a New Hampshire corporation to an LLC?
Advantages may include limited liability for members, greater flexibility in management and ownership, and potential tax savings.
Will the conversion to an LLC trigger a change in the corporation’s tax status?
It depends on the tax status of the corporation. Consultation with a tax attorney or accountant is recommended.
Are there any requirements for LLCs in New Hampshire regarding management and ownership?
No, LLCs in New Hampshire are not required to have a board of directors or officers, and the ownership can be structured in any way agreed upon by the members.
Will the conversion to an LLC impact the corporation’s ability to conduct business operations?
No, the corporation can continue to operate with the same business operations under the LLC structure.
Can the officers and directors of the corporation become members of the LLC?
Yes, officers and directors may become members by owning equity in the LLC.
Will the Corporation or officers be liable for prior legal processes after the conversion to LLC?
It depends on the terms of the conversion and any potential legal liabilities that arise in the process. Consultation with a legal expert is recommended.
How should a corporation’s property be valued when transferring to the new LLC?
The property should be valued based on the fair market value at the time of transfer to the LLC.
Can a New Hampshire corporation use the same name for the LLC after conversion?
Yes, the LLC may use the same name but should indicate its LLC status by added a phrase such as “Limited Liability Company.”
What happens to the stock of the corporation after the conversion to the LLC?
The stock of the corporation may be exchanged for equity in the LLC.
Are there any annual filings required for LLCs in New Hampshire?
Yes, LLCs are required to file an annual report with the New Hampshire Secretary of State.
Does New Hampshire have any requirements for LLCs to maintain a reserve fund for unexpected expenses?
No, New Hampshire does not require LLCs to maintain a reserve fund, but it may be a good practice.
Can a corporation convert to an LLC without any outstanding debts?
Yes, corporations with no outstanding debts may convert to an LLC.
Can a New Hampshire LLC revert to a corporation in the future?
Yes, it is possible to convert an LLC back to a corporation in New Hampshire.
How will the conversion impact the corporation’s contracts and obligations?
Contracts and obligations will generally transfer to the LLC as part of the conversion process.
Are there any filing fees associated with the conversion process?
Yes, there are filing fees for the Certificate of Conversion and any required amendments to the Articles of Incorporation or Organization.
Are there any limits to the number of stockholders for an LLC in New Hampshire?
No, there is no limit on the number of members who can hold equity in an LLC.
Will shareholders of the corporation maintain their ownership percentage in the LLC after conversion?
Typically, yes, shareholders will maintain their ownership percentage in the LLC after the conversion.
How will the ownership structure be set up for the new LLC?
The ownership structure can be set up any way agreed upon by the members, and it can include different classes of equity holders.
Can the conversion process be completed online?
The process can be started online, but several forms require manual completion and signature.
Will a new EIN be required for the LLC post-conversion?
It depends. If the LLC elected to be taxed as an S-Corporation, a new EIN would not be required.
Does the conversion process also transfer any licenses needed for the corporation’s business operations?
Licenses and permits may transfer over to the LLC but verification with the granting authorities are needed.
Can a New Hampshire corporation be converted to an LLC if it is presently the subject of litigation?
It depends on the circumstances of the litigation, consultation with the company’s counsel is recommended.
How is the dissolution and winding up of the corporation handled in the conversion process?
Generally, the operating agreements incidental to the LLC Organic form will handle the process rather than state law.
Can the privately held stock be transferred to the newly established LLC?
Yes, private stocks can be converted to equity holdings in the newly created LLC.
What is the difference between a corporation and an LLC founded in New Hampshire?
LLCs offer greater operational flexibility, provide limited liability to LLC members, avoid double taxation and can elect advantageous tax treatment.

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Conclusion

Converting New Hampshire corporation to an LLC can offer significant benefits for your business, including tax flexibility, simplified management, and reduced administrative requirements. However, it’s essential to carefully consider the potential challenges and implications of the conversion process. Following the steps outlined in this guide and seeking professional advice, you can successfully convert your corporation to an LLC and position your business for continued success.

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