Can You Domesticate or Convert a Colorado LLC to a Florida LLC?

Relocating, Domiciling, Transferring, or Converting a Colorado LLC to a Florida LLC

Updated: July 25, 2023
Reading Time: 10 Minutes

Objectives:

• Domicile a Colorado Limited Liability Company (LLC) to Florida;
• Maintain the same EIN and identity of the LLC; and
• Enjoy tax benefits provided to Florida residents.

Entities:

• Colorado Limited Liability Companies (LLCs)

Table of Contents

• What is a Conversion or Domestication?
• Does Colorado Allow LLCs to Move Out of State?
• Is My Colorado Entity Dissolved?
• Do I Need To Get a New EIN if I Domesticate My Company to Florida?
• How Does FL Patel Law PLLC Convert My Colorado LLC to a Florida LLC?
• How Long Does It Take To Complete a Domestication or Conversion to the State of Florida?
• What Are the Costs Involved in Domesticating My Colorado LLC to the State of Florida?
• What Are Some of the Risks Associated With a Conversion Gone Wrong?
• Increase Your Chances of a Successful Conversion
• What Are the Benefits of Converting My Colorado LLC to a Florida LLC?
• What Are the Tax Implications of Converting My Colorado LLC to a Florida LLC?
• Should I Work With Attorney Patel to Convert My Colorado LLC to a Florida LLC?

Relocating a business to Florida from out of state is a popular trend, and it’s easy to see why. After all, Florida has no state income tax plus many other laws and policies that entrepreneurs often find advantageous. Owners of Limited Liability Companies (LLCs) can accomplish this kind of move by using a corporate transaction known as “statutory conversion.” This process can be used to legally change a Colorado LLC to a Florida LLC.

Converting a Colorado LLC to a Florida LLC can seem like an intimidating prospect after considering all of the risks involved and the different steps that it requires. However, FL Patel Law PLLC’s guidance can make all the difference and help ensure a seamless transition. Our firm has successfully reorganized over 140 businesses into Florida entities, providing us with the necessary insight to prepare them for success in their new state.

This page will help you understand our process for converting a Colorado LLC to a Florida LLC, as well as how that process is designed to help save our clients time and money. It will also go over some of the risks that you and your company could be exposed to if you attempt a project like this without an attorney’s assistance.

Failing to follow each state’s strict requirements for converting an LLC to a new state can cause serious problems that even include your company’s liquidation. Our firm helps our clients transition their businesses to Florida while diligently minimizing delays and complications. Read more below on the risks associated with not doing a conversion properly.

A statutory conversion is a process available to LLCs in certain states that allows them to change their state of formation without dissolving their entity and restarting from scratch.

This process is frequently referred to as “domestication,” “conversion,” or “transfer” when the entity is converting to a different state. These terms can often be used interchangeably.

Because conversions allow companies to keep the same identity in their new state, the resulting Florida entity can continue benefiting from the same relationships, contracts, and licenses that it had back in Colorado. The Colorado LLC’s rights, assets, privileges, and liabilities will also transfer to the Florida LLC. There will be no interruptions to your business’s operations assuming everything is done the right way.

After its transition into a Florida LLC is complete, your business will be regulated by the Florida Revised Limited Liability Company Act. However, the Colorado Limited Liability Company Act might also apply under certain circumstances, such as if the LLC has a nexus or foreign qualification in that state after its conversion. Talk to our attorney about this during your initial consultation.

It’s possible to convert a Colorado LLC to a Florida LLC according to Section 7-90-201 of the Colorado Revised Statutes. Colorado corporations have a similar option available to them that you can learn about by clicking this link.

Converting your business into a Florida entity won’t dissolve your Colorado LLC, and it isn’t a necessary part of the process, either. Any websites you find that say otherwise are misleading and are clearly non-attorney sources. Dissolution could ruin your company’s corporate identity and break its continuity, which are two of the biggest benefits of relocating via statutory conversion in the first place.

Although the Internal Revenue Service (IRS) decides this on a business-by-business basis, our firm does everything in our power to ensure that our clients can keep using the same EIN after their company’s domestication or conversion. This requires protecting the company’s continuity at all costs while converting it from a Colorado LLC to a Florida LLC, as it must be the same entity that existed in its original state.

Even though every state sets their own standards and procedures for statutory conversions, there are some steps that they all generally follow. Below is an overview of what we do for our clients when they hire us to convert a Colorado LLC to a Florida LLC. These are not instructions, nor are they a substitute for actual legal advice. Schedule a time with our attorney now for guidance tailored to your business’s unique needs.

When we’re hired to convert a Colorado LLC to a Florida LLC, we first have an initial consultation with the client and conduct a thorough review of their business. This confirms that statutory conversion is the best method for relocating the company and also gives us the information we need to prevent problems before they ruin the company’s move altogether.

The support our clients enjoy when we domesticate or convert their companies to Florida includes:

• Drafting the Plan of Conversion and other required documents
• Ensuring compliance with the laws and other legal requirements in both states
• Filing the necessary documents with Colorado and Florida state agencies
• Updating the LLC’s operating agreement and other corporate documents to reflect its conversion from a Colorado LLC to a Florida LLC
• A comprehensive consultation to address final concerns and questions

Our firm can convert your Colorado LLC to a Florida LLC in about two or three months, which is the fastest possible completion time for this transition. In addition to expediting filings whenever we can, we’ve also developed a refined and efficient approach to these projects that won’t sacrifice your company’s safety.

The agencies responsible for conversions and domestications will each need several weeks of processing time, and often face their own delays caused by short staffing, backlogs, and other issues. In other words, even small mistakes have the potential to set your LLC’s relocation to Florida back significantly. That’s why it’s important to work with a law firm that knows how to get these things right on the first try.

Colorado charges $50.00 to process domestication documents while Florida charges $155.00. This means that your paperwork alone is going to cost at least $205.00 altogether, and that cost will only grow higher if you need to file again to correct any mistakes or missing information. Other problems, too, will come with costs of their own, such as if you accidentally liquidate your business while trying to convert it from a Colorado LLC to a Florida LLC.

We give our clients flat fees on all of our conversion and domestication projects. The exact cost is based on the specific demands and requirements of the move, which makes budgeting easier and prevents unexpected expenses. Schedule an initial consultation now to get a quote for your company’s relocation to Florida.

Unless the requirements of each state are satisfied perfectly, there are almost countless ways for your company’s relocation to end in disaster. However, our legal team’s attention to detail and deep understanding of state law can help you avoid the kinds of costly mistakes that could threaten your business’s existence.

Some of the risks involved with this type of transition include:

• Noncompliance with state laws
• Revocation of the LLC’s operating authority
• Damaged credit standing
• Damaged relationships with clients and vendors
• Disrupted contracts
• Loss of business continuity
• Loss of limited liability protection
• Tax implications and increased tax liabilities
• Legal disputes
• Dissolution or liquidation
• Missed opportunities
• Expensive fines
• Painful delays
• Taxes on Appreciated Assets – Depending on the LLC’s tax structure, its members could end up paying income taxes on appreciated assets if they make any errors during the conversion process. For instance, if an asset that was worth $100,000 at the company’s founding is now worth $1 million, and the company is mistakenly dissolved or liquidated, then the members could be taxed on the gained value.
• Title of Asset Issues – Another benefit of converting a Colorado LLC to a Florida LLC is that asset titles will automatically transfer over to the domesticated entity – that is, assuming the conversion process was handled correctly. This can make it difficult to prove ownership of those assets, which can cause major headaches when trying to sell a company, among other problems.

Keep in mind that these are only some of the problems that you might encounter when trying to domesticate or convert a Colorado LLC to a Florida LLC without legal guidance.

With over 140 business conversions and domestications to our credit, our firm’s proven track record means that you can rest easier knowing that your interests are in safe hands when we’re the ones in charge of converting your Colorado LLC to a Florida LLC.

Attempting to move a company across state lines without attorney oversight places your business in unnecessary danger. After helping so many businesses relocate to Florida over the years, our firm knows how to ensure successful conversions and domestications for our clients.

1. Your company won’t need to file with the State of Colorado ever again if converting from a Colorado LLC to a Florida LLC removes its nexus (taxable connection) in its original formation state.

2. Converting a Colorado LLC to a Florida LLC lets you work with Florida professional accountants, attorneys, and other service providers that know and live Florida LLC and business law.

3. Hiring our firm to convert a Colorado LLC to a Florida LLC means that you can enjoy the convenience of a smooth transition free from delays and complications.

4. Florida Articles of Organization will effortlessly replace our client’s original Colorado founding documents. All LLC powers remain LLC powers, along with rights, benefits, exemptions, privileges, and principles.

5. Statutory conversion won’t change anyone’s membership interest in the company. Real estate and other property rights will automatically transfer to the resulting entity when converting a Colorado LLC to a Florida LLC. However, make note that any liabilities of the LLC will remain unaffected by the Florida conversion, as will any pending lawsuits. Any pending legal procedures or actions will be substituted with the name of the Florida LLC.

6. There’s no need for the company’s members to live in Florida after the business’s conversion.

7. Your company won’t need to have a taxable connection to Colorado after converting from a Colorado LLC to a Florida LLC. This could reduce what your company pays in state income taxes and/or other LLC taxes that it dealt with in Colorado. Check with your tax professional for more guidance on taxes, as it is unique to each business.

8. Statutory conversion allows your company to keep using the same EIN in its new state. The process only changes the business’s state of formation. Otherwise, it’s still considered to be the same business and will report taxes as it always has.

9. Another convenience of converting a Colorado LLC to a Florida LLC is that the process lets your company continue using the same bank accounts, the same taxpayer ID, the same operations, and the same contracts after moving to Florida. Careful planning should be undertaken before engaging in domestication or conversion, however, to ensure that this is the case.

Before you start converting a Colorado LLC to a Florida LLC, it’s vital to understand the tax implications that the move will have for you and your business. Because we can only give general advice in these areas, you should contact your tax professional to ensure compliance with the IRS during your move. Some things to consider bringing up include:

• State Income Tax: You might already know that Florida, unlike Colorado, has no state income tax for individuals or businesses. While federal responsibilities will remain, this is one tax implication that could actually save your company money.

• Franchise Tax: Neither Florida nor Colorado have a franchise tax for LLCs, so this is one added expense that you won’t need to worry about when converting a Colorado LLC to a Florida LLC.

• Nexus: Colorado’s tax laws might still apply to your business if it still has a nexus in its original formation state, even after converting into a Florida entity. Nexus is generally established when a company has a physical presence, employees, or substantial activities in a particular state.

After we finish converting a client’s Colorado LLC to a Florida LLC, Attorney Patel holds a final consultation to address any remaining questions or concerns they have about their company’s move. During this meeting, they are also given a post-conversion checklist with instructions to help them adapt to their new responsibilities as Florida business owners.

Thanks to his experiences as both a lawyer and an entrepreneur, Attorney Patel’s insight and advice can be a powerful asset for our clients. Remember that, as a corporate law firm, we offer a suite of services to support our clients that could prove useful, if not necessary, to running a business in Florida.

The dangers of converting a Colorado LLC to a Florida LLC should not be underestimated by first-timers. By trusting your conversion to our Florida corporate law attorney, you’ll have more time and energy to focus on running your business while we tackle the legal complexities of its relocation. Schedule with us and get started today.

Are you ready to get away from the snowy Midwest and move your Colorado LLC down to sunny Florida? Don’t risk breaking your business’s stride — get assistance from an experienced business conversion attorney by calling (727) 279-5037 or by scheduling your initial consultation through our online calendar.

Image by mtcurado from Getty Images Signature courtesy of Canva Pro.