How to Convert an LLC to a C Corp: Step-by-Step Statutory Conversion Playbook
Converting an LLC to a Delaware C Corporation is typically executed via a statutory conversion or statutory merger to enable institutional fundraising, establish stock option pools, and qualify for QSBS tax treatment. A statutory conversion transfers all assets, liabilities, contracts, and IP directly to the new corporation by operation of law without requiring separate assignment agreements.
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To convert an LLC to a Delaware C Corp: 1) Prepare and approve a Plan of Conversion specifying member unit-to-share exchange ratios; 2) File a Certificate of Conversion and Certificate of Incorporation with the Delaware Secretary of State; 3) Adopt corporate bylaws and elect initial directors; 4) Issue stock certificates and execute Section 83(b) elections within 30 days; 5) Obtain a new federal EIN from the IRS (cites labor_salary_general_operations_managers)
The 6-Step LLC to C Corp Conversion Checklist
Execute this statutory conversion protocol to ensure complete legal compliance:
- Step 1: Member Approval & Plan of Conversion: Draft a formal Plan of Conversion. The LLC operating agreement usually requires majority or super-majority member approval to authorize the conversion. - Step 2: Delaware State Filings: File two documents simultaneously with the Delaware Division of Corporations: Form Certificate of Conversion and Certificate of Incorporation (including authorized shares and par value). State filing fee is ~$350 - $450.
- Step 3: Initial Board Action & Bylaws: Convene the initial Board of Directors meeting to adopt corporate bylaws, elect officers (CEO, Secretary, Treasurer), and authorize the share exchange (cites labor_salary_general_operations_managers). - Step 4: Share Issuance & Cap Table Allocation: Issue Common Stock to former LLC members matching their agreed equity percentages and set aside an unallocated 10% to 15% stock option pool (cites labor_salary_general_operations_managers). - Step 5: Section 83(b) Election Filings: All founders receiving unvested restricted stock must physically mail an 83(b) election form to the IRS via certified mail within exactly 30 days of stock issuance (cites labor_salary_general_operations_managers). - Step 6: IRS EIN and Bank Account Updates: Notify the IRS of entity type change or obtain a new EIN, and update commercial banking and payment processors (Stripe, Mercury).
Do This in Clerky or doola
Legal automation platforms simplify entity transformation:
- Clerky: Clerky provides specialized conversion packages drafted by top venture law firms. It structures the post-conversion Delaware corporate architecture to match venture standards, including clean investor rights, standard IP assignment, and board consents. Fit note: The best choice for venture-bound startups preparing for an upcoming priced seed round. - doola: doola assists founders with state conversion filings, new EIN applications, and tax reclassifications, ensuring continuity across financial accounts and registered agent records. Fit note: Ideal for international and e-commerce founders transitioning to corporate structures.
Strategic Comparison & Statutory Merger vs Conversion
Explore legal formation architectures in our Bizee vs doola vs Clerky Comparison. If your LLC was formed in a state that does not permit cross-state statutory conversions (such as New York), you must execute a 'statutory merger': form a new Delaware C Corp and merge the existing LLC into it. A statutory merger accomplishes the same operational result but requires additional state merger filings.
When to Choose Clerky
Choose Clerky when converting an LLC specifically to accept institutional venture capital investments via SAFE notes or Series Seed equity. Who should NOT choose Clerky: Companies needing complex tax restructuring for multi-million dollar real estate holdings.
When to Choose doola
Choose doola when you need white-glove assistance updating IRS records, managing registered agent transitions, and ensuring international compliance. Who should NOT choose doola: Teams with existing retained enterprise corporate counsel.
The Executive Recommendation
Do not let an LLC structure stall your fundraising round. Execute a statutory conversion via Clerky or doola, file your 83(b) elections within 30 days, and position your company for institutional scale (cites labor_salary_general_operations_managers)
What Good Looks Like
Corporate restructuring requires precise legal sequence execution to ensure tax-free Section 351 exchange status, seamless contract assignment, and clean capitalization records for incoming institutional investors (cites macro_rates_prime_rate)
Building The Capability (5-Stage Skill Ladder)
How to Get Started
Recommended options ordered by suitability to your operating stage, not commission.
Frequently Asked Questions
Is converting an LLC to a C Corp a taxable event?
Generally no. Under Internal Revenue Code Section 351, converting an LLC to a C Corp is treated as a tax-free exchange, provided liabilities assumed by the corporation do not exceed the tax basis of transferred assets (cites labor_salary_general_operations_managers)
How much does it cost to convert an LLC to a C Corp?
Using legal automation software like Clerky costs between $500 and $1,500 plus state filing fees (~$400) (cites labor_salary_general_operations_managers). Hiring traditional outside corporate legal counsel typically costs between $3,500 and $8,000 (cites macro_rates_prime_rate)
Do contracts and customer agreements need to be resigned after conversion?
In a statutory conversion, contracts transfer automatically by operation of law without requiring separate assignment agreements, unless a contract contains a specific change-of-control restriction.