Can You Domesticate or Convert a New Jersey LLC to a Florida LLC?
Relocating, Domiciling, Transferring, or Converting a New Jersey LLC to a Florida LLC
Updated: April 18, 2023
Reading Time: 10 Minutes
- Domicile a New Jersey 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 a Conversion or Domestication?
- Does New Jersey Allow LLCs to Move Out of State?
- Is My New Jersey Entity Dissolved?
- How Does FL Patel Law PLLC Convert My New Jersey 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 New Jersey 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 New Jersey LLC to a Florida LLC?
- What Are the Tax Implications of Converting My New Jersey LLC to a Florida LLC?
- Should I Work With Attorney Patel to Convert My New Jersey LLC to a Florida LLC?
New Jersey business owners could benefit from moving to Florida, as the Sunshine State has business friendly policies, no state income tax, and many other attractive prospects. This can be done through a corporate transaction called statutory conversion.
Converting a New Jersey LLC to a Florida LLC can be an intimidating project to take on alone, especially when you consider the various risks involved. 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.
Here, we’ll go over the steps our firm takes when converting a New Jersey LLC to a Florida LLC. We’ll also review possible roadblocks that might be faced along the way, as well as how an attorney can help avoid these complications and enable a smooth transition.
Florida and New Jersey’s statutory requirements for conversion must be satisfied with extreme diligence, as even simple mistakes could have massive repercussions ranging all the way from avoidable expenses to liquidation. The good news is that our firm is here to help our clients clear each step while minimizing delays and ensuring both legal and tax compliance. Keep reading to learn more about the dangers involved with converting a business without an attorney’s assistance.
What is a Conversion or a Domestication?To top
Statutory conversion is a method available under Florida law for changing a New Jersey LLC to a Florida LLC.
This process is known as “domestication,” “conversion,” or “transfer” when the company is moving to a new state. These terms are often used interchangeably, but in New Jersey, the process is known as “domestication” for LLCs.
By going through a conversion, a company can change its formation state without dissolving and starting the business all over again. This preservation of continuity can minimize or even eliminate disruptions while also maintaining contracts, licenses, and other important relationships. Rights, assets, privileges, and liabilities also transfer over to the converted entity.
New Jersey LLCs converting to Florida LLCs will be governed by the Florida Revised Limited Liability Company Act after their move. However, if the business has a foreign qualification authorizing it to operate in New Jersey, then it will still need to follow the New Jersey Revised Uniform Limited Liability Company Act as well. Be sure to discuss this with your attorney.
Does New Jersey Allow Limited Liability Companies (LLCs) to Move Out of State?To top
Yes, according to the New Jersey Statutes, it is possible to convert a New Jersey LLC to a Florida LLC.
b. A limited liability company may become a foreign limited liability company pursuant to this section, sections 83 through 85 of this act, and a plan of domestication, if:
(1) the foreign governing statute authorizes the domestication;
(2) the domestication is not prohibited by the law of the jurisdiction that enacted the governing statute; and
(3) the limited liability company complies with the foreign governing statute in effecting the domestication.
Is My New Jersey Entity Dissolved?To top
No, and you should not trust any source that instructs you do so when converting your business. If executed correctly, then the company’s status will be “converted out” rather than “active” or “inactive.” Initiating dissolution will only liquidate your company, which causes it to cease existing and can incur tax liabilities. Unfortunately, any articles online tell their readers that they should dissolve their entity when converting a New Jersey LLC to a Florida LLC, but this is misleading. Do not dissolve your LLC until you want to close it for good.
Do I Need To Get a New EIN if I Domesticate My Company to Florida?To top
While this will ultimately be determined on a situational basis, the Internal Revenue Service’s guidance says that LLCs that go through statutory conversion without making any other changes can keep using the same EIN, so long as the company’s continuity is maintained throughout the process. Protecting your business’s continuity is essential if you want it to keep its original EIN after converting from a New Jersey LLC to a Florida LLC.
How Does FL Patel Law PLLC Convert My New Jersey LLC to a Florida LLC?To top
Converting a business requires carefully executing a specific sequence of processes. Below, we’ll outline just a few of the different ways that we can assist clients looking to domesticate a New Jersey LLC to Florida. Keep in mind that this is general advice and is not meant for your exact situation. For guidance tailored to your business, please schedule a consultation with our attorney.
Our firm starts the conversion process with an initial review of the client’s business so that we can confirm that it’s the best method for relocating the company. This also gives us a deeper understanding of their business and their goals, and can identify potential issues before they arise. Then, by combining the collected information with our years of experience and insight, we devise a strategy for converting the LLC that is personally tailored to the client’s needs.
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 New Jersey and Florida state agencies
- Updating the LLC’s operating agreement and other corporate documents to reflect its conversion from a New Jersey LLC to a Florida LLC
- A comprehensive consultation to address final concerns and question
How Long Does It Take To Complete a Domestication or Conversion to the State of Florida?To top
In our firm’s experience, converting a New Jersey LLC to a Florida LLC takes about two to three months. We have managed conversions and domestications for over 140 businesses, and there is no way to do it faster.
Although we expedite filings whenever possible, the States of Florida and New Jersey will take several weeks to process the paperwork after receiving it because of delays in processing in each state. This means that it’s especially important to execute the conversion properly on your first attempt. Trying to do it yourself or working with inexperienced professions could result in a rejection, which can drag the process out even further and cost you even more in filing fees.
What Are the Costs Involved in Domesticating My New Jersey LLC to the State of Florida?To top
While the cost of your domestication project will likely involve more expenses than just state filing fees, they’re still something that you need to account for. Florida’s filing fee is $155.00 and New Jersey’s is $100.00, amounting to a total of $255.00. Be mindful that any mistakes that you make with these filings will require paying them again, too.
Our clients receive flat fees for domestication matters based on the specifics and complexities of their project. Schedule an initial consultation with our attorney to review your project and receive a quote. We handle domestication for our clients for both states and know how to minimize disruptions so that you don’t have to stress during the relocation.
What Are Some of the Risks Associated With a Conversion Gone Wrong?To top
Converting a New Jersey LLC to a Florida LLC is a highly involved process that requires unwavering attention to detail and a strong grasp of state law in both jurisdictions. Remember, even simple mistakes here could threaten your business’s future and your own financial security. However, a law firm’s assistance can help ensure that everything is done right the first time, which can ultimately save your business money by avoiding errors and safeguarding its continuity.
The minefield of risks that you expose yourself to by attempting to handle your LLC’s conversion without an attorney’s assistance includes:
- 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 New Jersey 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.
While this list might look extensive, it is just a sample of the various headaches, penalties, and outright disasters that can come about from a poorly managed 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 in charge of converting your New Jersey LLC to a Florida LLC.
Increase Your Chances of a Successful ConversionTo top
Your business is too important to leave its future up in the air while converting from a New Jersey LLC to a Florida LLC. Hiring our firm is the best way to set your business up for a successful conversion. Here are just a couple examples of how our experience and dedication has made a difference to our clients.
What Are the Benefits of Converting My New Jersey LLC to a Florida LLC?To top
1. If the LLC is no longer doing business in New Jersey after converting to Florida, then it will no longer have a nexus in its original state. This eliminates the need to file with the State of New Jersey going forward.
2. Converting a New Jersey LLC to a Florida LLC means that our clients can connect with local professional accountants, attorneys, and other service providers that know and live Florida LLC and business law.
3. Relocate to Florida from New Jersey without interruptions or threats to continuity by using a statutory conversion or domestication to relocate your business.
4. The LLC’s new Florida Articles of Organization seamlessly replace the initial founding documents from New Jersey. The LLC also retains all its powers, rights, benefits, exemptions, privileges, and principles, too.
5. The LLC’s members can keep their membership interest. Property rights, including real estate, also transfer over to the converted business. However, any liabilities faced by the LLC in New Jersey will also be unaffected, as will any pending lawsuits, in which case the old LLC’s name will be replaced with the one belonging to the Florida LLC.
6. There is no requirement to reside in the State of Florida after converting your New Jersey LLC to a Florida LLC.
7. Converting your New Jersey LLC to a Florida LLC means that your business likely won’t have a taxable connection (nexus) to New Jersey. This can lower what you pay on state income taxes and could have an impact on other taxes as well. Talk to your tax professional for help navigating these tax matters, as the specifics are unique to each business.
8. Domesticating the LLC lets you keep using the same EIN. It will be the same entity as before and it will keep reporting taxes as before, too. The company’s domicile is the only thing that changes when converting an LLC to Florida.
9. Relocating your New Jersey LLC to Florida with statutory conversion means that it can 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.
What Are the Tax Implications of Converting My New Jersey LLC to a Florida LLC?To top
Converting a New Jersey LLC to a Florida LLC can result in tax implications, the specifics of which depend on your LLC’s unique circumstances. Although our firm can provide limited guidance on some of these changes, it is imperative to consult with your tax professional to avoid fallout from the IRS or other problems. Some common items to think about discussing are:
- State Income Tax: Florida is among the few states without a state income tax, which is not the case in New Jersey. In other words, the LLC may be able to save on state income taxes on any profits it earns in Florida. The LLC will still need to pay federal income taxes no matter where in the country it is domiciled.
- Sales Tax: Florida only has a state sales tax, while New Jersey has both state and local sales taxes. After converting your New Jersey LLC to a Florida LLC, the business needs to register with the Florida Department of Revenue and pay any required sales taxes.
- Franchise Tax: Franchise tax is another area where you could experience potential savings, as Florida has no franchise tax for LLCs while New Jersey levies one against qualifying businesses.
- Nexus: It’s important to know that your LLC may still need to obey New Jersey tax laws if it still has a “nexus” in its original state, even if it is registered in Florida. Keep this in mind when deciding whether or not the LLC should continue doing business in New Jersey after the conversion.
Should I Work With Attorney Patel to Convert My New Jersey LLC to a Florida LLC?To top
Absolutely – our managing attorney’s wealth of experience means that our clients enjoy extensive support throughout the conversion process and beyond. They’ll also receive a follow-up checklist with next steps and instructions for handling post-conversion responsibilities.
Attorney Patel will go over this guide with you during a consultation. You’ll also have the chance to have him address any remaining questions or concerns you might have about your newly converted Florida LLC. Don’t forget that our law firm offers a suite of corporate law services to our clients that could likely come in handy after your relocation.
The potential dangers involved in converting your own New Jersey LLC to a Florida LLC should be averted at all costs. 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.
Interested in converting a New Jersey LLC to Florida? Don’t risk breaking your business’s stride — get assistance from an experienced business conversion attorney by scheduling online, calling (727) 279-5037, or visiting our contact page.