How to Convert a Delaware LLC to a California LLC?
According to California and Delaware laws and regulations, a Delaware LLC can be converted to a California LLC if necessary. This is essentially the process of converting an LLC that incorporated in Delaware to California. This article will briefly introduce several situations in which a Delaware LLC is converted into a California LLC, the materials required for the conversion, the procedure of conversion and the maintenance requirements after the conversion.
Members may consider converting an LLC from Delaware to California in the following situations:
- Members of a Delaware LLC move from Delaware to California.
- The LLC is incorporated in Delaware, but the principal business activity is in California.
- The primary supplier of the Delaware LLC moved from Delaware to California.
Converting a Delaware LLC to a California LLC requires the preparation of the following four documents:
- At the Delaware level, LLCs are required to complete the Delaware to Other State form “DE LLC to Non-DE Entity? This form mainly includes basic information about the Delaware LLC before conversion. For example, the name of the company before the conversion, the registration date of the company before the conversion, the conversion date, and the signature of the person in charge, etc.
- At the California level, LLCs are required to complete California conversion form LLC-1A. This form mainly includes the basic information of the LLC before and after the conversion. For example, the company name before and after the conversion, the form of the company before the conversion, the mailing address and business address of the company after conversion, and signature of the person in charge of the company.
- Draft a plan for the conversion of a Delaware LLC to a California LLC.
- Draft an operating agreement for a California LLC.
Converting a Delaware LLC to a California LLC generally follows the following process:
- LLCs are required to use a registered agent to provide this process service. A registered agent can be an individual or a company.
- The members of the Delaware LLC agree and sign the drafted conversion plan and new operating agreement.
- For Delaware, complete and sign the form "DE LLC to Non-DE Entity".
- For California, complete and sign the form LLC-1A.
- Submit the above two completed forms to the appropriate Delaware and California government.
- Pay required fees to the Delaware and California government.
- Maintain communication with the state government, answer relevant questions and provide other necessary information.
After the Delaware LLC is converted to a California LLC, the below maintenance requirements need to be followed:
- The converted California LLC can continue to use the original Delaware LLC federal tax identification number but may need to update the address and incorporated state information with the IRS.
- After the conversion, the converted LLCs need to file annual tax returns and annual renewal reports to the California government. The LLCs will be no longer required to file tax returns and annual renewal reports with the Delaware government.
- After the conversion, the LLC is required to pay at least $800 franchise tax per year to the California. LLCs do not have to pay the Delaware $300 a year.
Reference:
https://www.fortenberrylaw.com/llc-domestication-checklist/
https://www.fortenberrylaw.com/llc-domestication/
https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-a-new-ein
https://corpfiles.delaware.gov/DE%20LLC%20to%20Non-DE%20Entity09.pdf
https://bpd.cdn.sos.ca.gov/llc/forms/llcconv.pdf |
