Business Manager
Would it make more sense (and be easier) to convert from an S Corp to an LLC or dissolve the business and start new as an LLC. The business has not made much profit in the past few years.
Answers:
If your S Corporation hasn’t been profitable in recent years, simplifying your structure may make sense. Whether to convert or dissolve depends on your goals and state rules.
If the entity is clean and you want continuity (same EIN, bank accounts, and contracts), a legal conversion from S Corp to LLC is typically the smoother route. However, if the business has old liabilities, inactive operations, or you want a fresh start, dissolving the S Corp and forming a new LLC can be more practical.
Either option should be reviewed with your CPA and legal advisor to ensure compliance with both state filing requirements and IRS entity classification rules.
Nyquaise Moteng
S Corporations can be complex with many regulations by the IRS. I would dissolve the S Corporation keeping in mind you cannot do this again for 5 years. You will need to notify the IRS to also cancel your EIN #. Then set up a new LLC. Everything relating to the S corporation should be done 1st.
Jeanne Adams
