It's usually the other way around. People want to convert their Sole Proprietorship to an LLC. But in some circumstances an LLC may simply not be necessary or not permitted. For example, the following types of CA-licensed businesses cannot be LLCs: private security companies, barbers, interior designers, massage therapists, guide dogs for the blind, and many more.
Can I convert my LLC to a Sole Prop? Short answer, yes. Well... sort of. There's no conversion per se because you have to end one entity and then start the other. You first dissolve the LLC, wind it up, and file a certificate of cancellation. Then you take residual assets and goodwill from the LLC and apply them to your sole prop. In other words, you cancel the LLC and start your sole prop.
Dissolving the LLC. Dissolution is the formal process of ending your LLC. There should be a designated method for dissolution in the operating agreement. If not RULLPA has alternative default methods such as majority vote of the members. See Cal. Corp Code Sec. 17701.01.
Winding Up. This is the part where you tie all the loose ends of the business. You can elect one or more members to wind up the LLC business, which includes prosecuting or defending any pending actions by or against the LLC, disposing of LLC property, and dividing the LLC assets among the members, among other matters.
Certificate of Cancellation. The final step is to file a certificate of cancellation with the CA SOS, which includes (i) the name of the LLC, (ii) the SOS filing number, and (iii) a statement that you have filed or intent to file the final tax return with the Franchise Tax Board.
"Converting" to sole prop. Once you have dissolved, wound up, and cancelled the LLC it ceases to exist. You can take any residual assets that belonged to the LLC (and now belong to you) and use them in your new venture as a sole prop. Just make sure you have enough insurance to cover your liability exposures.
Possible situations where this could happens. John Doe starts a dog walking business and forms an LLC. He has a bank account, several vehicles, and other assets that belong to the dog walking business. Soon the dog owners start asking John to check on the their homes while they're away. The home check business picks up John finds its much less work for much more money. He decides to start a private security company and gets licensed in CA. John now wants to simply change the LLC name but do private security, but he can't. He must first dissolve the dog walking LLC and transfer all the assets to himself or the new private security business.
*This material is intended for general information purposes only and does not constitute legal advice. Each case requires unique legal analysis of law and facts. For legal issues that arise, the reader should consult legal counsel.