Domesticating or Converting a Maryland LLC to a Florida LLC

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

Updated: July 26, 2023
Reading Time: 10 Minutes

Objectives:

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

Entities:

• Maryland Limited Liability Companies (LLCs)

Table of Contents

• What is a Conversion or Domestication?
• Does Maryland Allow LLCs to Move Out of State?
• Is My Maryland 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 Maryland 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 Maryland 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 Maryland LLC to a Florida LLC?
• What Are the Tax Implications of Converting My Maryland LLC to a Florida LLC?
• Should I Work With Attorney Patel to Convert My Maryland LLC to a Florida LLC?

Relocating a business from Maryland to Florida could be advantageous for both the company and its owners for multiple reasons. For example, not only does Florida have no state income tax – our state also has many other pro-business policies in addition to a culture that embraces entrepreneurship as a virtue. This type of move can be made possible thanks to a legal process known as “statutory conversion,” which can be used to change your Maryland LLC to a Florida LLC.

Converting a Maryland LLC to a Florida LLC can seem daunting, especially if you don’t have the right legal guidance. FL Patel Law PLLC has the skills, knowledge, and expertise necessary to 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 post will show you some of the different ways that working with us to convert your Maryland LLC to a Florida can save your company both time and money in addition to helping ensure a seamless transition. It also has some warnings about the risks that you and your LLC will be exposed to if you attempt a transaction of this scope without an attorney’s guidance.

Because of the strict requirements of each state, there are many ways for things to go wrong when converting a Maryland LLC to a Florida LLC. Unless you have a lawyer’s help, you might even end up accidentally liquidating your company. Our firm guides our clients through each step while diligently minimizing delays and complications while also ensuring legal and tax compliance. Read more below on the risks associated with not doing a conversion properly.

Statutory conversion is a way for a company to change its formation state without dissolving and restarting from the ground up. However, both states involved must have similar laws authorizing this type of transfer.

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

Because converting a Maryland LLC to a Florida LLC allows it to keep the same identity, its continuity is protected during the move, which is helpful for preserving important relationships, contracts, and licenses that the business will need in its new state. The Maryland LLC’s rights, assets, privileges, and liabilities will also automatically carry over to the converted Florida LLC.

The Florida Revised Limited Liability Company Act will take over as your converted LLC’s regulating law after its conversion is complete. However, the Maryland Limited Liability Company Act could also apply to your business in certain situations, such as if it has a nexus or foreign qualification back in its original state. Talk to our attorney about this during your consultation.

Yes, Maryland is among the states that allow statutory conversions. You can convert a Maryland LLC to a Florida LLC under Section 4A-1101 of the Maryland Code. Maryland corporations have a similar path to reorganizing as Florida corporations known as domestication, which you can read about by clicking on this link.

No, your LLC will not be dissolved when it changes from a Maryland LLC to a Florida LLC. Its continuity will not be interrupted in any way, either, unless mistakes are made during the conversion process. Dissolution isn’t needed to relocate a company from one state to another, either, despite what some incorrect online sources might claim. Dissolution is only useful for preparing a company for liquidation.

While the Internal Revenue Service (IRS) will decide this based on circumstances specific to your company’s move, our firm does everything possible to ensure that our clients can continue using their original EIN after relocating to Florida. For this to happen, however, the LLC’s continuity must be kept intact throughout the entirety of its conversion from a Maryland LLC to a Florida LLC. No changes should be made to the company besides its new formation state, either.

Regardless of the states involved, all conversions share some steps in common. Be aware, however, that each state does have its differences. What follows is a general overview of our process, not instructions for converting a Maryland LLC to a Florida LLC. For that level of detailed and personalized guidance, you’ll need to schedule a consultation with our attorney.

First, we conduct an initial consultation and review the business to make sure that it qualifies for this type of transfer. The information that we gather at this point is also used to develop a customized plan for converting the business from a Maryland LLC to a Florida LLC that minimizes disruptions and prevents problems before they can threaten your company.

Our comprehensive LLC conversion services include the following:

• 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 Maryland and Florida state agencies
• Updating the LLC’s operating agreement and other corporate documents to reflect its conversion from a Maryland LLC to a Florida LLC
• A final consultation to address final concerns and questions

Our firm’s experience allows us to convert a Maryland LLC to a Florida LLC in about two or three months. This is the fastest possible timeline for a transition as significant as this one. We expedite filings whenever possible and have developed an efficient process for relocating companies to Florida as safely and as quickly as possible.

State agencies usually need several weeks each to process conversion documents, and that can be slowed down even further if they’re dealing with delay or short staffing. If you want to keep your business’s relocation to Florida on schedule, then it’s absolutely critical that no documents have to be corrected or otherwise submitted a second time.

Every state gets to set its own filing fees for LLC conversions. Maryland’s filing fee is $100.00 which, when added together with Florida’s fee of $155.00, comes to a total of $255.00 – and that’s just to have your paperwork processed. There’s no way to account for the expensive fines and fees that can result from mistakes and omissions with your filings, either, so extreme caution (and an attorney’s guidance) is advised.

Our clients receive flat fees based on the complexity of their conversion projects, which makes it easier to set a budget for their relocations. Schedule your initial consultation now to get a quote for converting a Maryland LLC to a Florida LLC.

Relocating a company across state lines requires navigating a complex process that can easily overwhelm those who haven’t managed a transition like this before. However, working with our attorney can go a long way in avoiding the kinds of costly mistakes that can follow you and your business far into the future.

Attempting to convert a Maryland LLC to a Florida LLC without the necessary skills and expertise can have the following consequences:

• 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 Maryland 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.

These are only some of the problems that can result from a failed conversion.

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 Maryland LLC to a Florida LLC.

Your LLC deserves the maximum amount of protection during its transition from a Maryland LLC to a Florida LLC. Hiring a firm as experienced as ours is the best way to ensure that everything runs smoothly when relocating a company to a new state.

1. Moving your business to Florida means that your company doesn’t need to file documents with the State of Maryland again if it no longer has a nexus in its original formation state.

2. Converting a Maryland LLC to a Florida LLC opens you up to work with Florida professional accountants, attorneys, and other service providers who can help augment your company’s operations.

3. Working with our firm can help ensure a smooth transition from Maryland to Florida free from interruptions and other problems.

4. Our client’s Florida Articles of Organization will immediately replace the initial founding documents from Maryland. All LLC powers remain LLC powers, along with rights, benefits, exemptions, privileges, and principles.

5. Membership interest will be unaffected by your company’s conversion from a Maryland LLC to a Florida LLC. This process will also automatically transfer the Maryland LLC’s real estate and other property rights to the resulting 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. The LLC’s members do not need to live in Florida after the business has been changed into a Florida entity.

7. After converting your Maryland LLC to a Florida LLC, your business will no longer need to have a taxable connection in its previous formation state, which can lower what it pays for state income taxes and potentially others as well. Talk to your tax professional for more on these matters, as they will vary from business to business.

8. You can continue using the same EIN for your converted Florida LLC that you used back when it was still a Maryland LLC.

9. Converting a Maryland LLC to a Florida LLC allows the business to keep the same bank accounts, the same taxpayer ID, the same operations, and the same contracts. Careful planning should be undertaken before engaging in domestication or conversion to ensure that this is the case.

Preparing for the tax implications of your move is one of the most important parts of converting a Maryland LLC to a Florida LLC. However, because we can only offer limited guidance here, consulting with your tax professional is vital to ensuring compliance. Some common things to bring up in your discussion with them include:

• State Income Tax: Florida’s lack of a state income tax is one of the things appreciated most by entrepreneurs relocating here from states like Maryland. Although federal responsibilities will remain, this means that your LLC might be able to save on state income taxes by relocating.

• Franchise Tax: Unlike Florida, Maryland has a franchise tax. The LLC will need to close its account with the Comptroller of Maryland and file final returns if required.

• Nexus: Maryland tax laws might still apply to your entity after it converts into a Florida LLC if it still has a nexus in its original formation state. Nexus is generally established when a company has a physical presence, employees, or substantial activities in a given state.

Once we’ve successfully converted a Maryland LLC to a Florida LLC, we finish the project off with a final consultation with Attorney Patel. This gives our clients a chance to ask any remaining questions they might have about their company’s relocation. We also provide them with a post-conversion checklist with instructions to help them adapt to their new responsibilities as Florida business owners.

The potential benefits of working with us don’t have to end with your company’s relocation, either. 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.

Don’t gamble with your company’s future by trying to convert it from a Maryland LLC to a Florida LLC without our help. 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 trade in the rocky shores of New England for Florida’s white-sand beaches? Don’t risk breaking your business’s stride — get assistance from an experienced business conversion attorney by calling (727) 279-5037 or by scheduling a time using Attorney Patel’s online calendar.

Source: Baltimore Harbor Bay Maryland by 1778011 from Pixabay.