QUESTION
Can you turn a non profit corporation into a for profit corporation and what do you need to submit to make the change if possible?
Asked on Nov 23rd, 2011 on Corporate Law - California
More details to this question:
I filed Articles of Incorporation through Legalzoom. I have not filed request for tax exemption due to lack of interest and thus, lack of funds for the initial premise for the non profit. However, I have a small business filed as an LLC that would like to incorporate. To save money, my colleagues and I would like to know if we can use the corporation I filed for the non profit to accomplish this. Can we do this through submission of Articles of Information? Is this even possible to do?
1 ANSWER
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No, you cannot convert a not-for-profit into a for-profit corporation. The articles of incorporation are totally different. Your LLC could be converted into a corporation without much difficulty. If you have "colleagues" in your LLC (presumably "Members") you should authorized the conversion in corporate minutes in conformity with your Operating Agreement.
LegalZoom and other online sites permit non-attorneys to form companies, but 90 percent of them are formed incorrectly since they do not properly issue their equity (membership interests in LLCs, shares in Corporations), never have a proper First Meeting or adopt Bylaws (Corp.) or an Operation agreement (LLC) and never consider matters such as a buy-sell agreement in case one party want to sell his shares, dies, becomes disabled, etc. Having an outside attorney you can call before a problem arises is always a good idea.
Answered on May 19th, 2012 at 6:42 PM