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My wife started the business as an LLC and last year changed…

My wife started the business...
My wife started the business as an LLC and last year changed it to a Scorp. I run the business for her (non paid) and have set up a bank account and checks in the new Scorp. 1. Do I need to phase out the LLC? 2. She has liens recorded on the LLC but I do not want them to follow over.What do I do?
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Answered in 2 minutes by:
12/12/2017
Lucy, Esq.
Lucy, Esq., Attorney
Category: Business Law
Satisfied Customers: 32,264
Experience: Attorney
Verified

Hello again,

Typically, when an LLC is converted to an S Corp, the LLC is then dissolved. That requires either paying the liens or "selling" them to the S Corp. If the corporation were dissolved and the liens not paid, the lien holders would likely sue the S corp as a successor corporation.

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Customer reply replied 8 months ago
Could I have both the Scorp and LLC, and phase out the use of the LLC till I eventually sell it? Cash flow is non existent so paying up the liens is not going to work. I started the Scorp for tax reasons.

Why would the S Corp be using the LLC at all at this point? It should be a separate entity.

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Customer reply replied 8 months ago
I would keep the LLC for the time being (dirty has the liens and history) and the Scorp is clean, I know it might be unethical but we are planning on selling the business in a few years paying up and moving to Florida debt free.

You could run into issues running both companies simultaneously, especially if someone sues either business. They might try to go after the other company's assets.

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Customer reply replied 8 months ago
Where do I keep the minutes from the Scorp, thx I'll rate you thank you much!

The corporation should have a file with all the meeting minutes. It can be on the computer if that's how you prefer to take notes, preferably a business-owned computer. But they should all be dated and easily accessible.

Lucy, Esq.
Lucy, Esq., Attorney
Category: Business Law
Satisfied Customers: 32,264
Experience: Attorney
Verified
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