How Our Law Firm Domesticates or Converts an Arizona LLC to a Florida LLC
Relocating, Domiciling, Transferring, or Converting an Arizona LLC to a Florida LLC
Updated: June 26, 2023
Reading time: 10 Minutes
- Domicile an Arizona Limited Liability Company (LLC) to Florida;
- Maintain the same EIN and identity for the LLC; and
- Enjoy tax benefits provided to Florida residents.
- Arizona Limited Liability Companies (LLCs)
Table of Contents
- What is a Conversion or Domestication?
- Does Arizona Allow LLCs to Move Out of State?
- Is My Arizona 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 Arizona 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 Arizona 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 Arizona LLC to a Florida LLC?
- What Are the Tax Implications of Converting My Arizona LLC to a Florida LLC?
- Should I Work With Attorney Patel to Convert My Arizona LLC to a Florida LLC?
Florida has almost countless benefits and attractions to offer business owners looking to give their companies a new home. After all, Florida has no income tax at the state level in addition to championing other pro-business policies. This move can be made possible through a legal process known as statutory conversion.
While converting an Arizona LLC to a Florida LLC is a significant undertaking that presents many challenges even under the best circumstances, FL Patel Law PLLC’s knowledge and guidance can make all the difference in securing a successful, painless conversion.
This article will introduce you to our firm’s procedure for converting an Arizona LLC to a Florida LLC and what we do to save our clients time, money, and stress during their company’s relocation while avoiding delays and other issues. It also has some important warnings about what can go wrong if you try to take on this type of project without the right legal guidance.
A strict series of procedures and filings must be flawlessly executed for a statutory conversion to be successful. Errors and omissions at any step can lead to problems ranging from unexpected expenses to your LLC’s liquidation. Keep reading for more about the dangers of converting an Arizona LLC to a Florida LLC without a lawyer’s oversight, as well as how working with our firm can prevent these types of threats to your company’s well-being and longevity.
What is a Conversion or a Domestication?To top
Statutory conversion is a way for an LLC’s members to move their company from one state to another without breaking its continuity.
Conversions from state to state are also known as “domestications” or “transfers,” and these terms can be used interchangeably.
If you use statutory conversion to change your LLC’s formation state, then you can relocate your business without shutting it down and starting all over again with a new corporate identity. During this process, all of the LLC’s original rights, assets, privileges, and liabilities will transfer over to the converted entity. It’s also advantageous for holding on to important relationships, contracts, and licenses.
After converting from an Arizona LLC to a Florida LLC, your company will be governed by the Florida Revised Limited Liability Company Act. If your LLC has a foreign qualification or still has a nexus in Arizona, however, then it will still need to abide by the Arizona Limited Liability Company Act. Be sure to bring this up when consulting with our attorney.
Does Arizona Allow Limited Liability Companies (LLCs) to Move Out of State?To top
Yes – an Arizona LLC can use statutory conversion to become a Florida LLC. Arizona corporations can become Florida entities by taking advantage of a similar method known as domestication. For more on Arizona’s conversion statutes, see Ariz. Rev. Stat. § 29-2502.
Section 29-2501 – Domestication authorized; definition
a. By complying with this article, a domestic entity may become either of the following:
A domestic entity of a different type.
A foreign entity of a different type if the conversion is authorized by the law of the foreign jurisdiction.
b. A foreign entity may become a domestic entity of a different type under this article if the conversion is authorized by the law of the foreign entity’s jurisdiction of organization.
c. If a protected agreement contains a provision that applies to a merger of a domestic entity but does not refer to a conversion, the provision applies to a conversion of the entity as if the conversion were a merger until the agreement is amended after the effective date of this section.
Is My Arizona Entity Dissolved?To top
No, dissolution should not be involved at any stage when converting an Arizona LLC to a Florida LLC. Any source suggesting otherwise is absolutely incorrect. Dissolving your business is the same as liquidating it, and it should only be done when the time comes to shut the company down once and for all.
Do I Need To Get a New EIN if I Domesticate My Company to Florida?To top
Ultimately, the Internal Revenue Service (IRS) decides this on a case-by-case basis depending on the business and what happened during its conversion. In most cases, an company that converts from an Arizona LLC to a Florida LLC can keep using the EIN it had in its previous state so long as the business’s continuity is uninterrupted and no changes are made to its corporate identity. Working with our firm can help ensure that this happens.
How Does FL Patel Law PLLC Convert my Arizona LLC to a Florida LLC?To top
What follows is a non-specific outline of how we help our clients convert their companies into Florida entities. It is general advice and is not a substitute for guidance tailored to your actual business. For guidance related to your company’s unique circumstances, please schedule a consultation with our attorney.
Converting an Arizona LLC to a Florida LLC with our firm begins with an assessment of the client’s company to confirm that statutory conversion is the best option for their business. It also serves as the foundation for our relocation strategy, as it allows us to identify and prevent potential problems before they happen.
Some of the comprehensive support provided by our conversion service 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 Arizona and Florida state agencies
- Updating the LLC’s operating agreement and other corporate documents to reflect its conversion from an Arizona 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 top
With FL Patel Law PLLC in charge of converting your Arizona LLC to a Florida LLC, you can rest assured that your company’s relocation will happen as quickly as possible. Our high level of efficiency comes from our experience handling these types of transactions for clients from across the country. Anyone claiming to have done this faster is probably mistaken, and likely dissolved their original entity and restarted in their new state.
Most conversions will take between two to three months because the state agencies responsible for processing our documents often have to deal with short staffing, backlogs, and other issues. This means that your conversion could be delayed by up to half a year or more if your paperwork isn’t perfect. The good news is that our legal team knows how to get everything right the first time.
What Are the Costs Involved in Domesticating My Arizona LLC to the State of Florida?To top
To convert an Arizona LLC to a Florida LLC, Arizona has a nonrefundable fee of $50.00, while Florida’s is $155.00. This comes to a total of $255.00 in filing fees, and having to pay those over and over again because you got something wrong or forgot to check a certain box can be as expensive as it is frustrating. Keep in mind that you might have to worry about more than just repeat filing fees, as certain mistakes could end up costing far more than just a few hundred dollars.
Because we offer flat fee conversion projects, our clients never have to worry about unexpected costs when setting a budget to transfer their businesses. Our flat fees are based on the specifics of the conversion, so schedule a consultation now to get a quote after our corporate attorney learns more about your project. Our legal team’s expertise means that we know exactly how to convert your Arizona LLC to a Florida LLC with a professional level of convenience, security, and efficiency.
What Are Some of the Risks Associated With a Conversion Gone Wrong?To top
You could end up creating a lot of problems for yourself if you try to convert your Arizona LLC to a Florida LLC without an attorney’s assistance. It’s a highly involved process that calls for a strong understanding of the laws in both states in addition to many other skills possessed by our legal team.
While this list is not comprehensive, some of the dangers of proceeding alone 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 when converting from an Arizona LLC to a Florida LLC, then the members could be taxed on the gained value.
- Title of Asset Issues – Another benefit of converting an Arizona 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 many different ways that you and your business could be placed in jeopardy if you make mistakes during your Arizona LLC’s 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 Arizona LLC to a Florida LLC.
Increase Your Chances of a Successful ConversionTo top
All of the work that you have put into your business could be lost if you mess up its conversion. Hiring our firm is the best way to ensure that your interests are protected and that everything goes according to plan when converting an Arizona LLC to a Florida LLC.
What Are the Benefits of Converting My Arizona LLC to a Florida LLC?To top
1. There will be no need to file with Arizona again once your conversion is complete as long as you no longer have a nexus in that state.
2. Domesticating or converting your company to Florida means that you can partner with Florida professional accountants, attorneys, service providers, and other professionals that can help take your business to the next level.
3. Using statutory conversion to enable your transfer means that your business’s continuity won’t be interrupted when relocating from Arizona to Florida.
4. Our team will draft Florida Articles of Organization that automatically replace the Arizona LLC’s initial founding documents upon filing.
5. Membership interest in the LLC will stay the same when using statutory conversion to move to Florida. Property rights, such as real estate, will automatically transfer to the converted entity, as will any liabilities and pending lawsuits. In the case of pending lawsuits, the Florida LLC’s name may be substituted in for clarity.
6. The LLC’s members do not need to live in Florida once the LLC has been converted into a Florida entity.
7. Converted entities don’t need to have a taxable connection (nexus) in their company’s initial formation state, which can lower the burden of state income taxes and/or other LLC taxes in that jurisdiction. Talk to your tax professional about this, as the specific implications will change from business to business.
8. Domesticating a company won’t change its original EIN. This is because the converted entity is the same one that existed in its previous state. It will continue reporting federal taxes in much the same way as before.
9. Your business can continue using the same bank accounts, the same taxpayer ID, the same operations, and the same contracts after converting from an Arizona LLC to a Florida LLC.
What Are the Tax Implications of Converting My Arizona LLC to a Florida LLC?To top
Moving a company from one state to another can often result in some significant tax implications, some of which could even work in your LLC’s favor. However, it’s imperative to discuss your move with your tax professional so that they can guide you through the specifics of these implications, which will vary from business to business. Our legal team can only provide limited, generalized information in these areas, but a few things to discuss with your advisor are:
- State Income Tax: Florida is famous for being one of the few states without an income tax, which can’t be said about Arizona. This is just one of the taxes you could save on by converting an Arizona LLC to a Florida LLC.
- Franchise Tax: Unlike Arizona, Florida’s franchise tax doesn’t apply to LLCs. The LLC will still need to close its accounts with the Arizona Department of Revenue and file final returns if necessary.
- Nexus: Your LLC will still need to follow Arizona’s tax laws if it still has a nexus there after its transfer. Typically, a nexus (or taxable connection) is created when a company has a physical presence, employees, or substantial activities in a given state.
Should I Work With Attorney Patel to Convert My Arizona LLC to a Florida LLC?To top
As our managing and founding attorney – and an entrepreneur himself – Attorney Patel has a wide range of information to share with his clients that can be helpful both during and after their company’s relocation. We also provide a checklist with instructions on how to best adapt to their new responsibilities as Florida business owners.
At the end of the project, Attorney Patel offers a final consultation to take care of any remaining questions or concerns that our clients might have. 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 endanger your business’s future by trying to take on converting your Arizona LLC to a Florida LLC unassisted. 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 to get started.
Ready to ditch the desert for sunny and tropical Florida? Help keep your company safe by trusting us with the conversion of your Arizona LLC to a Florida LLC. To schedule, call us at (727) 279-5037 or choose a time using our online calendar now.
Image by FotografiaBasica from Getty Images Signature Courtesy of Canva.com.