How to Domesticate or Convert a Michigan LLC to a Florida LLC With Our Attorney
Relocating, Domiciling, Transferring, or Converting a Michigan LLC to a Florida LLC
Updated: June 24, 2024
Reading Time: 10 Minutes
Objectives:
- Domicile a Michigan Limited Liability Company (LLC) to Florida;
- Keep the same EIN and identity of the LLC;
- Enjoy tax benefits provided to Florida residents.
Entities:
- Limited Liability Companies (LLCs)
Table of Contents
- What is a Conversion or Domestication?
- Does Michigan Allow LLCs to Move Out of State?
- Is My Michigan 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 Michigan 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 Michigan 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 Michigan LLC to a Florida LLC?
- What Are the Tax Implications of Converting My Michigan LLC to a Florida LLC?
- Should I Work With Attorney Patel to Convert My Michigan LLC to a Florida LLC?
There are many reasons why a Michigan LLC might want to become a Florida LLC these days. For example, Florida has no state income taxes, unapologetically pro-business policies, and many other appeals for entrepreneurs from across the country. This chance can be made by taking advantage of a corporate transaction known as statutory conversion.
Attempting to convert your own Michigan LLC to a Florida LLC can present a lot of challenges and dangers, some of which you might not be aware of until it’s too late. 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 show you how our firm can make life easier for you when converting a Michigan LLC to a Florida LLC. We’ll also touch on some of the risks associated with an incorrectly executed conversion and what an attorney can do to help you avoid those pitfalls and complications.
Each state has strict requirements for how a conversion should be conducted. Failing to follow those requirements can lead to painful consequences that even include the liquidation of your business. Our firm’s guidance through the process can help minimize delays and complications while working to ensure regulatory and legal compliance, too. Keep reading to find out more.
What is a Conversion or Domestication?
To topStatutory conversion is a legal process that a business can use to change from a Michigan LLC to a Florida LLC.
This process is often referred to as “domestication,” “conversion,” or “transfer” when the entity is converting to a different state. These terms are often used interchangeably.
Conversions are often advantageous because they allow companies to change their formation state without dissolving or restarting their business from scratch. Clients appreciate that this method minimizes disruptions and helps preserve important relationships, contracts, and licenses. The company’s rights, assets, privileges, and liabilities will transfer over seamlessly, and the LLC can even keep doing business during the relocation, too.
After converting or domesticating to Florida, the LLC will be governed by the Florida Revised Limited Liability Company Act. However, if it still does business in Michigan through a Foreign Qualification, then it might still need to follow the rules of the Michigan Limited Liability Company Act as well. Be sure to talk about this with our attorney during your consultation.
Does Michigan Allow LLCs to Move Out of State?
To topYes. As of the date of this article, it is possible to convert a Michigan LLC to a Florida LLC under Section 450.4708 of the Michigan Limited Liability Company Act under the Michigan Compiled Laws. Michigan corporations have a similar option available to them, which you can read more about here.
Sec. 708. (1) A domestic limited liability company may convert into a business organization if all of the following requirements are satisfied:
(a) The conversion is permitted by the law that will govern the internal affairs of the business organization after conversion and the surviving business organization complies with that law in converting.
(b) Unless subdivision (d) applies, the domestic limited liability company proposing to convert adopts a plan of conversion that includes all of the following:
(i) The name of the domestic limited liability company, the name of the business organization into which the domestic limited liability company is converting, the type of business organization into which the domestic limited liability company is converting, identification of the statute that will govern the internal affairs of the surviving business organization, the street address of the surviving business organization, the street address of the domestic limited liability company if different from the street address of the surviving business organization, and the principal place of business of the surviving business organization.
(ii) The terms and conditions of the proposed conversion, including the manner and basis of converting the membership interests of the domestic limited liability company into ownership interests or obligations of the surviving business organization, into cash, into other consideration that may include ownership interests or obligations of an entity that is not a party to the conversion, or into a combination of cash and other consideration.
(iii) The terms and conditions of the organizational documents that are to govern the surviving business organization.
(iv) Any other provisions with respect to the proposed conversion that the domestic limited liability company considers necessary or desirable.
Is My Michigan Entity Dissolved?
To topNo. This is actually one of the benefits of converting a business. Dissolving your business will cause it to no longer exist and could, in fact, completely ruin your domestication project. An unfortunate number of websites claim that dissolving your company is a part of changing a Michigan LLC to a Florida LLC, but this is not the case. Dissolution should only be initiated when it’s time to close the company for good.
Do I Need To Get a New EIN if I Domesticate My Company to Florida?
To topThe Internal Revenue Service (IRS), the agency responsible for issuing a company’s EIN, generally allows converting LLCs to retain their original EIN as long as the business maintains its continuity and no other significant changes are made. However, it will ultimately come down to the specifics of your situation.
How Does FL Patel Law PLLC Convert my Michigan LLC to a Florida LLC?
To topWe begin by reviewing our client’s business and operations, which includes going over their formation documents and tax structure. This lets us plan out how we can help them achieve their goals for domesticating their Michigan LLC to a Florida LLC. It also ensures that it’s a good option for them, too.
We provide comprehensive support throughout the conversion process that 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 Michigan and Florida state agencies
- Updating the LLC’s operating agreement and other corporate documents to reflect its conversion from a Michigan LLC to a Florida LLC
- An exit consultation to address final concerns and questions
How Long Does It Take To Complete a Domestication or Conversion to the State of Florida?
To topBecause of our firm’s experience in this field, it should only take about two or three months to convert a Michigan LLC to a Florida LLC. We expedite filings whenever we can, but the time that it takes for each state to process those filings means that this is the fastest timeline possible.
Managing your Michigan LLC conversion on your own or handing the project off to inexperienced professionals makes mistakes more likely, which can lead to costly delays. When domiciling a business to Florida, time is of the essence, so it’s important to get things right on the first try. A trusted business attorney can assist with this and help convert your business as quickly as possible.
What Are the Costs Involved in Domesticating My Michigan LLC to the State of Florida?
To topThe fees for converting a Michigan LLC to a Florida LLC come to a total of $180.00. Florida’s filing fee comes to $155.00, while Michigan’s is $25.00. Of course, you should expect other fees and expenses to arise when domesticating your business, and those costs will grow higher if you make any mistakes when conducting the conversion yourself.
FL Patel Law PLLC’s clients enjoy flat fees on their domestication projects based on the complexity of the move. Schedule an initial consultation with our attorney to review your project and get a quote. We handle domestication for our clients for both states and make everything as easy as possible while minimizing disruptions.
What Are Some of the Risks Associated With a Conversion Gone Wrong?
To topIt takes more than just a few simple filings to successfully convert a Michigan LLC to a Florida LLC – it calls for intense attention to detail and a strong understanding of state law in each jurisdiction. Thankfully, hiring an attorney for your conversion project means that you can worry less about your business’s continuity being threatened by simple mistakes or other omissions.
Without legal guidance, converting your company could lead to problems that 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 Michigan 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 a sample of the things that can go wrong when a conversion isn’t executed perfectly.
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 Michigan LLC to a Florida LLC.
Increase Your Chances of a Successful Conversion
To topWithout an attorney on your side, the chances of things going wrong during your conversion go up significantly. Hiring our firm is the best way to make sure that everything is done right the first time when converting a Michigan LLC to a Florida LLC.
What Are the Benefits of Converting My Michigan LLC to a Florida LLC?
To top1. Michigan LLCs that stop doing business in Michigan after converting to Florida LLCs don’t have to file with the State of Michigan if they no longer have a nexus in that location.
2. Relocating to the Sunshine State means that our clients can network with local professionals, such as attorneys and other in-demand service providers, that know and live Florida LLC and business law.
3. Move from Michigan to Florida uninterrupted and safe from threats to your business’s continuity by using statutory conversion or domestication to facilitate its relocation.
4. The LLC will retain its powers, rights, benefits, exemptions, privileges, and principles when converting to Florida. The company’s new Florida Articles of Organization also replace the initial Michigan founding documents without any need to pause for a transition period.
5. The LLC’s members can keep the same amount of interest in the company. Property rights such as real estate carry over to the converted entity. Pending lawsuits and liabilities against the Michigan LLC also continue uninterrupted, although the Florida LLC’s name may be substituted in for clarification.
6. You do not need to reside in the State of Florida after converting your Michigan LLC to a Florida LLC.
7. Many Michigan LLCs that move to Florida can sever their taxable connection (nexus) to their home state, potentially lowering what’s paid on state income taxes. Other taxes could be impacted as well, so talk to your tax professional for guidance and advice on these matters.
8. Domesticated LLCs are the same entity that existed in their previous state and can keep using the same EIN. Tax reporting duties will not be impacted by converting the Michigan LLC to a Florida LLC, as its domicile is all that changes.
9. Michigan LLCs that have converted to Florida can continue using the same bank accounts, taxpayer ID, operations, and contracts. However, careful planning should be done before domesticating or converting a business to prevent potential errors or other problems.
What Are the Tax Implications of Converting My Michigan LLC to a Florida LLC?
To topConverting a Michigan LLC to a Florida LLC can come with tax implications. Our legal team can help you understand some of the potential changes, but it’s crucial that you discuss this matter with your tax professional. The specific implications depend on your business, but some potential changes to be aware of include:
- State Income Tax: Michigan levies a state income tax on its residents, but Florida does not. This could lead to savings on state income taxes on profits earned in Florida. However, federal income taxes will be unaffected.
- Franchise Tax: Also known as a business income tax, Michigan has a franchise tax. Florida, meanwhile, does not impose this on Florida LLCs. The LLC will need to close its account with the Michigan Department of Treasury and file final returns if needed.
- Nexus: Even if your LLC has converted and registered with the State of Florida, it may still be subject to Michigan tax laws if it still has a “nexus” in its original state. A nexus exists in any state where a business has a physical presence, employees, or otherwise conducts substantial activities. Remember this when deciding whether the LLC should keep doing business in Michigan after converting to a Florida LLC.
Should I Work With Attorney Patel to Convert My Michigan LLC to a Florida LLC?
To topThe type of legal advice and guidance that you’ll receive from Attorney Patel when converting a Michigan LLC to a Florida LLC can benefit you in ways that extend beyond your relocation. We also provide a post-conversion checklist to help our clients acclimate their new lives as Florida LLC owners.
Once the project is complete, Attorney Patel also provides a post-conversion consultation to answer any remaining questions. 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.
Trying to convert your own Michigan LLC to a Florida LLC can expose you and your business to significant setbacks, liabilities, and other problems. 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, too. Schedule with us and get started today.
Are you ready to move your Michigan LLC from the Midwest down to sunny and beautiful Florida? Don’t risk breaking your business’s stride — get assistance from an experienced business conversion attorney by calling (727) 279-5037, or if you are ready to convert your Michigan LLC to a Florida LLC, schedule your consultation using our online calendar now.
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