Convert LLC to C-Corp: CO Founder Pair Arizona

So, you and your co-founder started an LLC in Arizona. Now, as you look towards 2026, you're considering converting to a C-corp. This is a significant step, often driven by the need to attract investors or offer stock options. This connects to our resource on incorporating in Arizona, which covers the details. This guide will walk you through the process in Arizona, highlighting key considerations for co-founder pairs and how Lovie can streamline the transition.

When to Convert

• Seeking Venture Capital Funding: Most venture capital firms prefer investing in C-corps due to their familiarity with the corporate structure and its suitability for equity investments.
• Planning to Issue Stock Options: C-corps are designed for issuing stock options to employees and advisors, incentivizing them with equity.
• Preparing for a Potential Acquisition: C-corps are generally more attractive to acquiring companies due to their established corporate structure and easier transfer of ownership.
• Expanding Nationally or Internationally: C-corps are often viewed as a more established and credible business entity when operating across state lines or internationally.
• Desire for Lower Personal Income Tax Rate: While Arizona has a flat 2.5% individual income tax rate, a C-corp structure allows for retaining earnings within the corporation, potentially deferring personal income tax.

Conversion Steps

1. Assess Your Current LLC Structure: Review your LLC's operating agreement, member contributions, and any existing liabilities. Understand the implications of converting these assets and liabilities to a C-corp.
2. Create a Conversion Plan: Outline the steps involved in the conversion, including the transfer of assets, liabilities, and equity. Define the new C-corp's capital structure and stock allocation for you and your co-founder.
3. Adopt a Plan of Conversion: Formally document the plan of conversion, outlining the terms and conditions of the transition from LLC to C-corp. Both co-founders must approve this plan.
4. File Articles of Incorporation with Arizona Corporation Commission: Prepare and file the Articles of Incorporation for your new C-corp with the Arizona Corporation Commission. The filing fee is currently $60, but check for updates in 2026.
5. Obtain an EIN from the IRS: Apply for a new Employer Identification Number (EIN) from the IRS for your C-corp. This is a free process and can be done online.
6. Transfer Assets and Liabilities: Transfer all assets and liabilities from the LLC to the newly formed C-corp. This includes bank accounts, contracts, and intellectual property.
7. Notify Relevant Parties: Inform customers, vendors, and other stakeholders of the conversion from LLC to C-corp. Update all business documents and registrations accordingly.

Start your formation with Lovie — $499 one-time, state filing fee included.