A number of people who own businesses in Texas are curious about whether or not they can change their LLCs into LLPs. The answer to that question is yes, but before you start the procedure of becoming an LLP in Texas, there are a few things about it that you need to understand. In this article, we will walk you through the steps necessary to convert your limited liability company in Texas into a limited liability limited partnership (LLP).
In addition, we will provide you with some advice on how to simplify and streamline the procedure as much as possible. One of the many advantages of doing this is improved protection against personal responsibility. This is only one of the many advantages. You may make the transition using any one of the following methods:
File a Certificate of Amendment with the Texas Secretary of State
Texan limited liability companies that desire to switch to limited liability partnerships must submit a petition to the Texas Secretary of State. All partners or a majority of partners are required to sign the petition for conversion, and it must include the following information:
- The name and address of each person who has contributed any capital
- The name and address of each member
- The date on which the partnership began conducting business
- A statement that the partnership is not maintaining its books and records based on fiscal years
- The date on which the petition for conversion was filed
A stop order prohibiting further use of the limited partnership name until the information is provided shall be issued by the secretary of state if any item required by this subsection is not included in the petition for conversion or if the information requested by this subsection is not furnished to the secretary of state within 60 days after filing the petition for conversion.
Amend Your Operating Agreement Before Becoming an LLP In Texas
You may need to study the Running agreement that your present company uses for your LLC to function as an LLP in Texas after operating for some time as an LLC. This is necessary for your LLC to be allowed to operate as an LLP. You must get legal counsel so that you know all that has to be done about converting between different kinds of organizations.
The requirements vary from state to state, so you must do so. In certain circumstances, all that the Secretary of State’s office will want from you is a simple update to the current Operating Agreement, and they will provide their stamp of approval. Your papers should be returned to you within a couple of weeks after all of this has been taken care of.
Publish a Notice of Intent to Convert to LLP
As the Secretary of State, you must submit a “Notice of Intent to Convert to Limited Partnership” if you want to change your LLC into an LLP in Texas. This lets the government know that you want to change your company’s structure, which will help them properly register and tax your business. The Secretary of State must receive your conversion paperwork no sooner than 180 days after your notice has been issued.
The conversion might be challenged in court by creditors or minority shareholders during this period. Waiting 180 days is unnecessary if no one plans to file a challenge, but it provides them time to do so. Different states have different procedures for converting an LLC to an LLP. A file with the secretary of state is obligatory in most states, and it may need to include certain details to be approved. Depending on your situation, a lawyer may advise you on what to include in your business plan.
Hold a Meeting of Members or Managers
Worrying about converting to an LLP after forming an LLC in Texas is unnecessary. However, a handful of options are open to you if you want to convert your corporation’s operating agreement into that of a limited liability partnership. The most common method is for members or management to get together and vote on the matter. Members of a limited liability corporation (LLC) are all co-owners of the business and get a proportional part of the firm’s revenues and losses, according to shsu.edu.
Make sure all of your partners are on board with forming an LLP before you do so. It’s improbable that a judge would rule in favor of a board or management voting to remove and replace a member. If this were to happen anyhow, it might pose legal complications if one of the members felt their ownership rights were infringed upon.
With one of the world’s most complicated legal systems, many American companies are confused about LLCs and LLPs. LLPs are considered partnerships, whereas LLCs are corporate entities, yet both are set up similarly. Texas LLCs may become LLPs under specific instances. Call The Corporation Center at (800) 580-4870 to learn about your rights as a business owner and how to form an LLP in Texas.