How to Convert or Domesticate a California Corporation to Florida to Save Money on Taxes

Relocate, Transfer, Convert, or Domesticate a California Corporation to Florida

Updated: June 24, 2024
Reading Time: 10 Minutes

Objectives:

• Domicile a California C or S Corporation to Florida;
• Keep the same EIN and corporate identity; and
• Enjoy tax benefits provided to Florida residents.

Entities:

• California Corporations

Table of Contents

• What is a Domestication, Conversion, or Transfer?
• Can California C or S Corporations Move to Another State?
• Will This Dissolve My California C or S Corporation?
• Do I Need to Get a New EIN After Domesticating My C or S Corporation to Florida?
• How Can FL Patel Law PLLC Help Domesticate a California Corporation to Florida?
• How Long Will It Take for FL Patel Law PLLC to Domesticate a California C or S Corporation?
• How Much Does it Cost to Domesticate a California Corporation to Florida?
• What Are Some of the Dangers of Domesticating a C or S Corporation Without an Attorney’s Assistance?
• Make Your Domestication More Convenient and Secure with FL Patel Law PLLC
• What Are the Benefits of Domesticating a California C or S Corporation to Florida?
• What Tax Implications Can I Expect if I Domesticate a California Corporation to Florida?
• Should I Hire FL Patel Law PLLC to Domesticate My California C or S Corporation?

Florida is a popular destination for California C and S corporation owners looking to escape their home state’s high taxes and cost of living. In addition to having no income tax at the state level, Florida’s government and culture are both highly supportive of business owners. This type of move can be made by using a type of corporate transaction known as “domestication.”

The process to domesticate a California corporation to Florida is complicated, especially for first-timers. FL Patel Law PLLC’s experience in this field can be an invaluable asset when it comes to preventing delays and even more serious problems. Our firm has successfully reorganized over 140 businesses into Florida entities, which is why you can trust us to have the knowledge and expertise needed to manage your relocation.

In addition to laying out some of the steps we take to domesticate a California corporation to Florida, this article will go over some of the many ways that working with us can save you time and money. It will also have some important warnings about the dangers of taking on a project of this scope without an attorney’s help and how doing so puts you and your company at unnecessary risk.

Don’t underestimate how serious the consequences can be if you make any mistakes trying to domesticate a California corporation to Florida without help. Depending on what goes wrong, you might even accidentally liquidate your California C or S corporation. Our firm will help you safely navigate each stage of the process, and can apply our knowledge to everything from helping keep your company in compliance to protecting its corporate identity, and much more.

Domestication is a legal process for changing a California C or S corporation into a Florida entity.

This transition is also commonly known as a “conversion” or “transfer” when the company is moved to a new state. These terms can often be used interchangeably.

When you domesticate a California corporation to Florida, you can change its formation state and domicile without giving up on all your hard work, dissolving the company, and reincorporating all over again. It’s a method frequently appreciated by entrepreneurs from around the country because it preserves the entity’s corporate identity, which helps it hold on to all of its pre-existing contracts, relationships, and licenses, rights, assets, privileges, and liabilities.

After your C or S corporation domesticates to Florida, it will be governed by the Florida Business Corporation Act (FBCA) instead of the California Corporations Code (CCC) unless it has a foreign qualification or economic nexus in its previous state. Don’t forget to bring this up when you meet with our attorney.

Yes, changes to the California Corporations Code made in 2023 now enable business owners to domesticate a California corporation to Florida. California LLCs can pursue a similar path to reorganizing as Florida entities by taking advantage of a process called statutory conversion.

No, and it isn’t needed to domesticate a California corporation to Florida, either. Once the process is complete, the company will be listed as “Converted Out” on the California Secretary of State’s website, rather than as “Active” or “Inactive.” However, certain errors can initiate dissolution, so hiring an attorney to manage this type of project is essential to preserving continuity when domesticating a C or S corporation.

This is usually on a case by case basis. The EIN is issued by the Internal Revenue Service (IRS), they have provided if you generally conduct a statutorily conversion, without any other changes, you would retain your EIN as it is the same business as it’s continuity is retained. Continuity of your business is very important if you want to keep the same EIN when you domesticate a California corporation to Florida.

While the exact steps to domesticate a company differ from state to state, there are some parts of the process that they all have in common. What follows is a general outline and not explicit instructions or advice for transferring your business to Florida. Please schedule a consultation with our corporate attorney for guidance specific to your situation if you’re looking to domesticate a California corporation to Florida.

Before we start to domesticate a California corporation to Florida for our clients, we first review their business to make sure that it’s the optimal method to use for their transfer. This added level of insight and investigation is critical to the project’s success, as we use that information to develop a customized plan for domesticating the C or S corporation. It’s also foundational towards preventing problems that could derail the relocation altogether.

The comprehensive support that our clients receive from us when we domesticate a California corporation to Florida includes:

• Drafting all documents required to domesticate a California corporation to Florida, including the Plan of Domestication;
• Ensuring compliance with the laws, regulations, and other legal requirements present in both California and Florida;
• Handling all filings and correspondence with California and Florida state agencies;
• Updating the C or S corporation’s bylaws and other corporate documents to reflect its domestication to Florida; and
• A final consultation at the end of the project where our corporate lawyer will answer any questions you have left about your company’s relocation.

After handling domestications and other corporate reorganizations from states across America, our firm has built a streamlined process for relocating companies to Florida as quickly and safely as possible. Our legal team can domesticate a California corporation to Florida in about two to three months, but it could take longer depending on the size of your company and its assets.

Most of this time is spent waiting for state agencies in California and Florida to process our filings. Patience is often needed here, as these agencies are plagued by issues like backlogs and short staffing. Something important to keep in mind if you try to domesticate a California corporation to Florida yourself is that, because of these issues, mistakes and errors can set your project back significantly.

Filing fees are the first expense that you’ll need to account for when you domesticate a California corporation to Florida. Each state has its own different fee for processing domestication paperwork. California’s is $150.00 and Florida’s is $128.75, which comes to a total of $278.75, so it’s easy to see how things can get expensive fast if you mess up your documents or encounter other issues.

With our firm in charge of your domestication, there’s no need to worry about unexpected costs coming up when relocating your California C or S corporation. Our clients receive flat fees for their domestication projects, which can make budgeting easier and even ultimately lower costs. Schedule a consultation with Attorney Patel now to get a quote for your company’s domestication.

In order to successfully domesticate a California corporation to Florida, the person (or legal team) in charge needs to have a number of interdisciplinary skills as well as a familiar understanding of the laws in both states. Hiring a law firm is the best way to make sure that you’re equipped with the knowledge, expertise, and vigilant attention to detail necessary for this type of transition.

Trying to domesticate a California corporation to Florida without an attorney’s oversight can expose both you and your business to the following problems:

• Noncompliance with state laws
• Revocation of the California C or S corporation’s operating authority
• Damaged credit standing
• Damaged relationships with clients and vendors
• Disrupted contracts
• Loss of continuity
• Piercing the corporate veil
• Loss of liability protections
• Tax implications and increased tax liabilities
• Legal disputes
• Dissolution or liquidation
• Missed opportunities
• Expensive fines
• Painful delays
• Taxes on Appreciated Assets – The gained value of your company’s appreciated assets could pass on to its shareholders if you make a mistake when domesticating it to Florida. In other words, if something that was valued at $500,000 when the business was incorporated is now valued at $5,000,000, then you and your fellow business owners could be responsible for that increase.
• Title of Asset Problems – Without us around to make sure that everything is done correctly, then your company’s asset titles might not automatically transfer over to your Florida entity. If that happens, it can be difficult or even impossible to prove that your C or S corporation owns those assets. In addition to other problems, this can be a major roadblock if you ever try to sell your business.

Keep in mind that this list is not exhaustive, and that there are still more problems that can come up if something goes wrong trying to domesticate a California corporation to Florida.

FL Patel Law PLLC has helped bring over 140 companies to Florida with their corporate identities intact. A track record of this caliber means that we know how to domesticate a California corporation to Florida securely, efficiently, and with everyone’s interests protected at every stage of the project.

If you attempt to domesticate a California corporation to Florida without legal guidance, then there’s no guarantee that your relocation will even be successful in the first place. Hiring our firm can help avoid interruptions or other unwanted surprises when relocating your company to Florida. Working with us isn’t just a massive convenience – it’s foundational to securing the overall success of the project, too.

1. If your company stops having a nexus (taxable connection) in California, then it can do away with the hassle of filing with the State of California ever again. Your original nexus will likely be removed if your corporation ceases activities in that state, but there are more details about that further on down the article.

2. Domesticating your C or S corporation to Florida means that you can network with Florida professional accountants, attorneys, and other service providers.

3. One of the main reasons we typically recommend domestication to our corporate clients is that it facilitates a smooth transition to Florida without interruptions or delays.

4. Your California C or S corporation’s Articles of Incorporation will be seamlessly replaced by the Florida Articles of Incorporation that our firm will draft and file on your behalf. Your company will also retain all of its corporate powers, rights, benefits, exemptions, privileges, and principles.

5. The shareholder’s stock in the company, and the value of that stock will not be impacted when we domesticate a California corporation to Florida. During this process, real estate and other property rights will automatically transfer to the Florida entity. This is also true for any liabilities or lawsuits faced by the corporation. The Florida corporation’s name may be substituted in place of the California entity’s name for any pending legal procedures or actions.

6. The corporation’s shareholders do not need to be Florida residents after the domestication is complete.

7. Domesticating a California corporation to Florida means that you don’t need to have a taxable connection, also known as a nexus, in California anymore. Removing this connection could reduce what you pay on state income taxes and/or other taxes that the company was subjected to in California. Talk to your tax professional about this, as tax implications will vary from business to business.

8. Your California corporation can keep using the same EIN after domesticating to Florida. Because only its domicile has changed, it’s still considered to be the same entity that existed previously, and will continue reporting taxes as before.

9. Another reason that it can be advantageous to domesticate a California corporation to Florida is that the process lets it keep using the same bank accounts, the same taxpayer ID, the same operations, and the same contracts that it did before relocating. However, this might not be the case without careful planning, research, and legal guidance.

A corporate transaction of this size can have serious tax implications for both you and your business. Because attorneys and law firms can only offer some general advice for navigating these changes, your tax professional’s guidance will be just as important as a lawyer’s when you domesticate a California corporation to Florida. A few issues that you should go over with them are:

• State Income Tax: One of the most appreciated differences between California and Florida is that our residents don’t have to pay any income tax at the state level, although Federal tax responsibilities will remain. Saving on state income taxes is just one of the ways that you might benefit from domesticating to Florida.

• Franchise Tax: Unlike California, Florida has no franchise tax for either C or S corporations. The company will need to close its account with the California Franchise Tax Board and file final returns if necessary.

• Nexus: A nexus is a business’s taxable connection to a particular state. This connection can be created by having a physical presence, employees, or otherwise engaging in substantial activities in that jurisdiction. If your C or S corporation still has a nexus in California after moving, then it will need to follow tax laws in both states.

On top of the peace of mind that comes with hiring our firm to domesticate a California corporation to Florida, Attorney’s Patel’s guidance and advice on both legal and business matters can make all the difference when it comes to setting up a company for success in a new state. As a corporate law firm, we also provide a full suite of services that are essential to operating a C or S corporation in Florida.

Once their California corporation’s move is complete, our clients will meet with our corporate attorney to address any remaining questions or concerns. During this consultation, they also receive a helpful checklist containing instructions to help them adapt to their new lives as Florida business owners.

Don’t gamble with your company’s future by trying to domesticate a California corporation to Florida on your own. Hiring us for your relocation means that you can move forward with confidence, security, and more time to focus on what matters most: actually running your business. Schedule now to get started.

Moving cross-country is going to take up enough of your time. Spare yourself the stress by trusting our firm to domesticate your California C or S corporation to Florida. Don’t risk breaking your business’s stride — get assistance from an experienced corporate domestication attorney by calling (727) 279-5037 or by scheduling your consultation through our online calendar.

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