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Business investment tax consequences of LLC and s corporation, changing business name

Lexington, KY |

Would an original business agreement be nullified if it is converted to an LLC with a different company name, but still the same business? Should we sign a new agreement with this new company name.

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Posted

DISCLAIMER- THIS IS NOT INTENDED TO AND DOES NOT CONSTITUTE LEGAL ADVICE AND DOES NOT ESTABLISH AN ATTORNEY-CLIENT RELATIONSHIP. CONSULT QUALIFIED LEGAL COUNSEL IN YOUR CITY OR STATE FOR IMMEDIATE LEGAL ADVICE.

It depends on the language contained in the original business agreement. Normally controlling business agreements should be updated when major changes to a business (such as the entity status or ownership) occur. This way, all documents are current and this avoids a judgment creditor from raising issues allowing him/her or it to pierce the corporate veil or to allege an alter ego theory. Contact a qualified lawyer in your city today to get the update or amendment done!

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Jon Mitchell "Mitch" Jackson
Jackson & Wilson, Inc.
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Posted

STANDARD DISCLAIMER -- I'm not your attorney, and this isn't legal advice. Also, from your question I'm not sure whether you are asking about a name change or a statutory conversion of the LLC into a new entity.

That said, you've two things to investigate. One is whether the agreement or contract addresses the result of a name change or conversion. I can't help you with that, as I haven't reviewed teh document.

Two is whether a statute addresses the result of the name change. A name change should not cause issue. As to statutory conversions, most states, including Georgia, where I practice, have statutes that state all contracts, agreements, etc. remain in place after the conversion of the LLC to another entity.

My best advice -- check with a local business/corporate lawyer.

P.S. Some local governments (cities, counties, townships) may require you to get a new business license or amend your existing business license.

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Converting a business from one form (S corporation) to another form (LLC) can be a taxable event for tax purposes. You really need to check with a qualified attorney to assist you in any business conversion. Merely changing the name, but not the form of a business, on the other hand, is typically not a taxable event.

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