Can You Domesticate or Convert a Virginia LLC to a Florida LLC?
Relocating, Domiciling, Transferring, or Converting a Virginia LLC to a Florida LLC
Updated: March 17, 2023
Reading Time: 10 Minutes
- Domicile a Virginia Limited Liability Company (LLC) to Florida;
- Maintain the same EIN and identity of the LLC;
- Enjoy tax benefits provided to Florida residents.
- Limited Liability Companies (LLCs)
Table of Contents
- What is Conversion or Domestication?
- Does Virginia Allow LLCs to Move Out of State?
- What are the Benefits and Effects of Converting My LLC?
- How Do I Convert My Virginia LLC to a Florida LLC?
- How Long Does It Take to Complete a Domestication or Conversion to the State of Florida?
- Can I Dissolve My Entity in the State of Virginia?
- What Are the Tax Implications of Converting My Virginia LLC to a Florida LLC?
- Should I Work with a Lawyer to Convert My Virginia LLC to a Florida LLC?
Virginia LLC owners might have a lot to gain by relocating operations to Florida. This is because our state is aggressively pro-business and has no state income tax, along with countless other benefits and attractions ranging from our white sand beaches to our world famous theme parks. Those interested in such a move should look into a type of corporate transaction known as a “statutory conversion,” which is available to businesses from states with reciprocal laws authorizing the transfer.
Converting a Virginia LLC to a Florida LLC changes its state of formation and domicile to a new location while preserving the business’s identity for federal tax purposes. Our clients often like this method because it lets them relocate their businesses without major interruptions or changes. As with most transactions crossing state lines, it can be a complicated project that takes a significant amount of time and energy to see through. Here, we’ll review the steps our firm takes when converting a Virginia LLC to a Florida LLC, as well as possible roadblocks and things to consider before and after domesticating a Virginia LLC to the State of Florida.
Just like with any other big transition, talking to an attorney and/or tax advisor about your Virginia LLC conversion is advised, as it can expose both you and the LLC to unnecessary risks. Careless mistakes during conversions and domestications can lead to noncompliance with state laws and regulations, legal penalties, financial losses, and more.
What is a Conversion or Domestication?To top
Conversions are a method authorized by the Florida statutes that can change a Virginia LLC to a Florida LLC while preserving its continuity and certain aspects of its corporate identity, such as its EIN and initial formation date. The same process is sometimes also referred to as domestication in situations like this where a business is going from one state to another. Essentially, it replaces the LLC’s original formation state with a new jurisdiction without dissolving it or forming a new entity, minimizing disruptions. When done right, it allows the company to continue doing business uninterrupted when relocating while keeping the same rights, assets, privileges, and liabilities.
After converting a Virginia LLC to a Florida LLC, the business will be regulated by the Florida Revised Limited Liability Company Act. In most cases, it will no longer fall under the governance of the Virginia Limited Liability Company Act. If the newly converted Florida LLC has a foreign qualification back in Virginia, however, then it will need to follow the laws prescribed by both states.
Does Virginia Allow LLCs to Move Out of State?To top
Yes, it’s possible to convert a Virginia LLC to a Florida LLC according to Va. Code Ann. § 13.1-1074. Virginia corporations that want to relocate to the Sunshine State have a similar option available to them, known as corporate domestication.
B. A domestic limited liability company not required by law to be a domestic limited liability company may become a foreign limited liability company if the jurisdiction in which the limited liability company intends to domesticate allows for the domestication. Regardless of whether the laws of the foreign jurisdiction require the adoption of a plan of domestication, the domestication shall be approved in the manner provided in this article. The laws of the jurisdiction in which the limited liability company domesticates shall govern the effect of domesticating in that jurisdiction.
What are the Benefits and Effects of Converting My LLC?To top
1. The LLC will no longer have an economic nexus in its original state if it no longer transacts business in Virginia after converting to a Florida LLC. Without this nexus, there is no need to continue filing with the State of Virginia.
2. Converting a Virginia LLC to a Florida LLC allows our clients to collaborate with other professionals, including accountants, lawyers, and more, who call the Sunshine State home.
3.The conversion process lets Virginia LLCs move to Florida without pausing operations or disrupting continuity.
4. The converted LLC’s Florida Articles of Organization replace the original Virginia formation documents without interruption. The company will also have the same powers, rights, benefits, privileges, exemptions, and principles that it enjoyed in its previous state.
5. Membership interest in the LLC is unaffected when converting a Virginia LLC to a Florida LLC. Property rights such as real estate carry over to the converted entity. Pending lawsuits and liabilities against the Virginia LLC also continue uninterrupted, although the Florida LLC’s name may be substituted in for clarification.
6. You do not need to live in Florida after converting a Virginia LLC into a Florida LLC.
7. Using statutory conversion to move your LLC to Florida in many cases eliminates the business’s taxable connection (nexus) to Virginia, which can reduce or do away with state income taxes. Be sure to discuss this with your tax advisor, as the specifics are unique to each business.
8. A Virginia LLC can continue using its original EIN for taxes and other reporting duties after it domesticates to Florida. The converted entity is still the same one that existed before, just with a new domicile.
9. Turning a Virginia LLC into a Florida LLC through conversion also allows the entity to keep 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.
How Do I Convert My Virginia LLC to a Florida LLC?To top
The potential legal, tax, and business implications of converting a Virginia LLC to a Florida LLC should not be underestimated. Even smaller, more tightly run operations can encounter challenges in these areas. The risk of costly delays, noncompliance penalties, and other obstacles can be reduced by working with experienced attorneys and tax professionals to domicile a business to Florida.
Converting a Virginia LLC to a Florida LLC is done through a series of filings in each state. Here is a general overview of how our firm helps clients convert Virginia LLCs to Florida LLCs.
1. Initial Assessment. Our firm begins the conversion process by studying our client’s business and operational structure to identify the specific goals and needs that will need to be addressed when domesticating the Virginia LLC to a Florida LLC. We review formation documents and tax structure, research both Florida and Virginia’s conversion requirements, and anticipate potential tax implications that could result from the move. This helps ensure that domestication is the right choice for our clients and can also help us identify potential problems before they derail the project entirely.
2. Drafting the Plan of Conversion. The first document that our firm will draft for our domesticating clients is a Plan of Conversion. A Plan of Conversion includes the statutory requirements in both Virginia and Florida, how to structure the transaction for tax purposes, who the company’s members are, and what will be done with membership interest. It must also satisfy any and all other requirements under the law in both states.
3. Plan of Conversion Approval. Once we’ve prepared the Plan of Conversion, it then needs to be approved by the Virginia LLC members in accordance with the Virginia Limited Liability Company Act and/or the company’s operating agreement.
4. Drafting Documents for the State of Virginia. Once the Members have signed off on the Plan of Conversion, the attorney managing your domestication will then prepare a Statement of Conversion. This document is filed with the State of Virginia to inform them that the LLC will no longer be active in its original state.
5. Drafting Documents for the State of Florida. Our firm will also prepare a second Statement of Conversion to be filed with the State of Florida that includes the LLC’s new Florida Articles of Organization that will be its new charter under state law. This filing informs the State of Florida that the converting Virginia LLC is registered in Florida.
6. Filing Domestication Documents in Both States. Once we’ve prepared the necessary documents and the LLC’s members have authorized the conversion, we can file with the State of Florida. Once they’ve processed their side of the paperwork, we can then go on to file with the State of Virginia.
7. Paying Required Domestication Fees. Florida charges $155.00 to convert a Virginia LLC to a Florida LLC, while the fee for Virginia is $25.00. This adds up to a total of $180.00.
8. Post Conversion/Domestication. After filing with both states, it’s time to start updating our client’s corporate documents. This includes things like the LLC’s operating agreement, as well as any existing foreign qualifications or trademark registrations.
9. Attorney Consultation. Our conversion clients can also benefit from a follow-up checklist with next steps and instructions to help them adapt to their new responsibilities as Florida LLC owners. For example, new tax accounts will need to be opened and the old tax accounts need to be closed. Our attorney closes out the conversion by reviewing this introductory checklist with the client and answering any follow-up questions.
How Long Does it Take To Complete a Domestication or Conversion to the State of Florida?To top
Converting a Virginia LLC to a Florida LLC typically takes between two or three months to complete using our firm’s tried and trusted process. With over 140 domestications and conversions to our credit, we’re confident in saying that there’s no way to do it faster.
Although we expedite our conversion and domestication filings when we can, the fact of the matter is that the state agencies in Virginia and Florida will need several weeks to process the paperwork, usually because of backlogs and other delays. This is another reason why you should consider hiring an attorney to manage converting your Virginia LLC to a Florida LLC, as mistakes could postpone your move or even liquidate the business.
Can I Dissolve My Entity in the State of Virginia?To top
No – dissolving your entity liquidates the business and can disrupt your efforts to convert a Virginia LLC to a Florida LLC. Unfortunately, we find many sources online that falsely assert that this is a necessary part of the domestication process. This is not the case. Dissolution should only be pursued when it’s time to close a business for good.
What Are the Tax Implications for Converting a Virginia LLC to a Florida LLC?To top
There are often tax implications that result from converting a Virginia LLC to a Florida LLC. The specific implications depend on things that are unique to every business. However, some potential changes to discuss with your tax professional before relocating are:
- State Income Tax: One reason for Florida’s popularity is that it does not impose a state income tax. Virginia, on the other hand, does have a state income tax. This means that the LLC may be able to save on state income taxes on its earnings in Florida. That said, no state in the country can exempt you from needing to file at the federal level.
- Sales Tax: Florida only has a state sales tax, while some parts of Virginia also levy local and regional sales taxes. The converted entity will need to register with the Florida Department of Revenue and pay any required sales taxes.
- Nexus: Even after converting from a Virginia LLC to a Florida LLC, a business may still need to adhere to Virginia tax laws if it still has a nexus (a taxable connection) in that jurisdiction.
- EIN Number: A business that converts from a Virginia LLC to a Florida LLC can keep using the same EIN. A dissolved entity will lose its EIN, which can come with associated tax liabilities, so be careful that this does not happen while domiciling a business to Florida.
Should I Work with a Lawyer to Convert My Virginia LLC to a Florida LLC?To top
We sure think so – and so did the over 140 other businesses that hired us to help relocate to our state. Hiring an attorney to help convert a Virginia LLC to a Florida LLC can minimize the risks of something going wrong and can give you more time to focus on your operations. Regardless of your company’s size or industry, finding the right legal counsel to manage its domestication to Florida is essential to setting it up for success in the future.
Ready to embrace the good life by moving your Virginia LLC down to beautiful Florida? Don’t risk your business’s continuity – enlist the help of an experienced business domestication attorney by calling (727) 279-5037, or if your business is ready to move, check out our service page.
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