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Changing LLC Business Purpose in a Few Steps (Details)

Max Smith

Reading Time: 5 minutes

Do you want a change in your LLC purpose? Changing LLC business purpose is possible. Sometimes, you may create an LLC and later want to change its purpose to gain more success.

Getting a new business purpose is easy if you follow the rules of your operating agreement and state. An expert service can help you change your purpose officially and legally.

In this article, you are going to learn a few steps to changing the purpose of a business entity. Let’s go!

Of course! An LLC’s business purpose is always changeable. But it also depends on your state-specific requirements. However, in most cases, changing the purpose of an LLC is simple and permissible.

The business purpose is included in the “Articles of Organization.” You should show the reasons behind forming an LLC when you register your LLC. There are many examples of the business purposes of an LLC. For instance,

  • Furniture industry nationwide freight services.
  • Real estate purchases, sales, and investments.
  • Packing and retail operations for frozen yogurt.
  • Medical supply device manufacturing and logistics.

Lastly, your LLC can change its purpose later by following rules and steps.

How to Change LLC Business Purpose in 7 steps?

Changing the purpose of your LLC business requires a formal process. Let’s write down a few simple steps to follow to change your LCC business purpose easily.

Step 1: Reviewing the Operating Agreement

Do you know your LLC’s operating agreement well? If not, then please go through it.

You may find some rules regarding changing business purposes. It may help you to provide a guideline. Then, the changing purpose will be smooth.

Otherwise, you may also find out about any restrictions on changing business purposes in your LLC operating agreement.

Step 2: Checking State Requirements

Is there a set of rules or forms to follow when changing the purpose of a business? Some states have their own different rules and forms. In that case, you must contact your state registration office to learn the rules better. You can also check them out on the state website.

Step 3: Voting

Do all the members agree on changing business purposes? You can hold a meeting and arrange a voting system to know everyone’s opinion clearly. It aids in clarifying members’ agreement to change an LLC’s business purpose.

Step 4: Articles of Amendment

When you have decided to change the purpose of the business, it is time to create “Articles of Amendment.” It is also called a “Certificate of Amendment” or a “Certificate of change.” It brings a change in the operating agreement. 

Let’s check out the steps to apply for articles of amendment.

  • Show the name of the LLC.
  • Write down the date of your LLC.
  • The exact changed information on the operating agreement, For example, the new business purpose.
  • Including specific article text that the LLC is changing.
  • The registered agent’s names and addresses.
  • Signature of an authorized person.

Step 5: File Documents

You should add some more papers with the articles of amendment. So contact your state officials. They will tell you if they need any particular documents or not. If yes, then prepare and submit them to the state officials.

Step 6: Updating Records

After changing the business purpose, update it in the record books. The updated documents will reflect the business purpose. It includes the internal documents, operational agreements, and more.

Step 7: Informing Third Parties

It’s time to notify the third party about the purpose change. So, third parties will remain updated about your LLC. For example, vendors, customers, suppliers, and more.

Whether you change your business purpose or structure, all the related parties and agencies should know about it.

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How to Change the LLC Business Type Smoothly?

You cannot change your business structure before 5 years of its existence. So if 5 years have not passed yet, you may wait. 

But if it has already been 5 years, now you can follow a simple process to change your LLC business type.

  • Understanding New Business Types

Did you think deeply before deciding to change the business type? You must think about the hazards and outcomes. For instance, the effects on tax, profit, and overall business.

  • Operating Agreement

Check out your LLC internal review. You may find an article that will help you change your LLC business type.

  • Fill Out the Forms

Contact your state officials or agencies. They will give you official forms to fill out.

  • Preparing Documents

While you are applying for a change in business type, you may need to make extra paperwork. It will support you in creating a new business structure. For instance, you may need a new EIN.

  • Submission

Now submit the form and documents, both with the associated fees. The fess is a variable in states. So, contact the state officials first to know the correct fee amount.

  • Liabilities and Asset Transformation

Your LLC’s business structure may change. But what about the liabilities and assets? You must transfer them to your new business type.

  • Members Approval

In order to turn a business into another structure, you may need a few more members. For example, when you turn a single-member LLC into a corporation, you need members. 

Do you know how a corporation can own an LLC? Click here to read our article about how a corporation can own an LLC.

  • Regulatory Approval

In some states, it is mandatory to get regulatory approval. So, if your state requires regulatory approval, then get it. Otherwise, your new business type may face troubles and penalties.

  • Notify Others

It’s time to notify third parties and relevant agencies. They get an update about your organization and may help you get documents and other tasks done smoothly.

  • Update Licenses

As your business structure is now suspended, renew your licenses as a new business structure. Plus, continue any agreements with the latest business structure. Mention your new business name in the documents to ensure they are aligned with the new business structure.

Conclusion

In the end, changing LLC business purpose is easy if you know the rules or have an expert with you. Otherwise, you may make a mistake, which delays the business purpose-changing process.

Frequently Asked Questions

Can I change the purpose of my LLC with the IRS?

You must notify your IRS about changing the purpose of your LLC. Use Form 8832, Entity Classification Election, to change the federal tax classifications of your LLC.

What's the purpose statement of an LLC?

An LLC purpose statement is an official document. It describes the motive or purpose of forming an LLC. Plus, it also tells about the type of business your company is in.

What's an LLC amendment form?

An LLC amendment form is a legal document used to add, extract, or change any term in the original content of the articles of your LLC. For example, business purpose, members’ details, company name, and more.

Max Smith - LLC Formation

He is a seasoned entrepreneur and legal expert at LLC Formation Hub. With a stellar track record in both business and law, Max simplifies the complexities of LLCs. His practical insights, featured on LLC Formation Hub, empower entrepreneurs across the USA. Max merges business finesse with legal acuity to guide businesses toward success.


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