9 Reasons Why You Should Convert or Domesticate a Delaware Corporation

9 Reasons Why You Should Convert or Domesticate a Delaware Corporation

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

Updated: July 13, 2023
Reading Time: 10 Minutes

Objectives:

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

Entities:

  • C Corporations
  • S Corporations


Table of Contents

  • What is a Domestication, Conversion, or Transfer?
  • Can Delaware C or S Corporations Move to Another State?
  • Will This Dissolve My Delaware C or S Corporation?
  • How Can FL Patel Law PLLC Help Domesticate a Delaware Corporation to Florida?
  • How Long Will It Take for FL Patel Law PLLC to Domesticate a Delaware C or S Corporation?
  • How Much Does it Cost to Domesticate a Delaware 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 Delaware C or S Corporation to Florida?
  • What Tax Implications Can I Expect if I Domesticate a Delaware Corporation to Florida?
  • Should I Hire FL Patel Law PLLC to Domesticate My Delaware C or S Corporation?


Recent years have seen more companies relocating to Florida than ever before, and it isn’t hard to imagine why. After all, Florida has no state income tax as well as many other pro-business policies that can benefit C and S corporations alike. This type of move can be made by using a type of corporate transaction known as domestication.

The process to domesticate a Delaware corporation to Florida can present many challenges, 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, and that’s why you can trust us to have the knowledge and expertise needed to manage your relocation.

This page will show you some of the steps we take to domesticate a Delaware corporation to Florida, as well as how working with our legal team can save you time and money in addition to making the whole process less stressful and complicated. It also has some warnings about the dangers of attempting this type of move without an attorney’s oversight.

The mistakes you make when domesticating a company can place both you and your C or S corporation in serious trouble, both financially and otherwise. Without legal guidance, you might even accidentally liquidate your company. Our firm can help you safely navigate your way through your company’s domestication while working to ensure regulatory compliance and much more.




What is a Domestication, Conversion, or Transfer?

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Domestication is a process available in many states that allows a C or S corporation to change its domicile. For example, it can be used to domesticate a Delaware corporation to Florida.

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

Domestication allows corporations to relocate without forcing them to dissolve and reincorporate as a new entity in their chosen state. During this process, the Delaware corporation’s licenses, rights, assets, privileges, and liabilities automatically transfer over to the resulting Florida corporation. It’s also helpful for maintaining relationships, licenses, and contracts that are vital to the company’s operations.

The Florida Business Corporation Act (FBCA) will replace the Delaware General Corporation Law (DGCL) as your C or S corporation’s governing law after it moves to Florida. However, both regulations may apply if the company has a foreign qualification or economic nexus in Delaware after its domestication. Talk to our corporate law attorney about this during your meeting together.

Corporate transactions often come with legal and tax implications. Mistakes during the domestication process could pierce your corporate veil or discourage potential investors. Your corporation could even be liquidated or dissolved. It’s always worth the effort to find a qualified lawyer to assist you.
Pro Tip: Do you need a certificate of good standing from Delaware? Some online resources claim that you need a certificate of good standing, but this document is not needed to domesticate a Delaware corporation to Florida. The company must, however, be in good standing with the State of Delaware.




Can Delaware C or S Corporations Move to Another State?

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Yes, according to Section 266 of the Delaware Code. Delaware LLCs have a similar path to Florida available to them known as statutory conversion.

§ 266 Conversion of a domestic corporation to other entities.

(a) A corporation of this State may, upon the authorization of such conversion in accordance with this section, convert to a limited liability company, statutory trust, business trust or association, real estate investment trust, common-law trust or any other unincorporated business including a partnership (whether general (including a limited liability partnership) or limited (including a limited liability limited partnership)) or a foreign corporation.

Del. C. § 266.

Will This Dissolve My Delaware C or S Corporation?

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Your Delaware corporation will not be dissolved during its domestication assuming everything is done correctly. It is not a necessary step to domesticate a Delaware corporation to Florida, either, despite the incorrect advice coming from some online non-attorney sources. Dissolution will lead to the liquidation of your C or S corporation. Companies should only file for dissolution when they’re ready to shut down for good.

Do I Need To Get a New EIN if I Domesticate My Company to Florida?

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The Internal Revenue Service (IRS), the agency who issued your EIN, will determine this on a situational basis. That said, they tend to allow domesticating corporations to keep using the same EIN as long as their continuity isn’t interrupted during the move. Helping secure your original EIN is just one of the many benefits of hiring our corporate law firm to domesticate a Delaware corporation to Florida.

How Can FL Patel Law PLLC Help Domesticate a Delaware Corporation to Florida?

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Every state sets their own procedures for domesticating a company to a new state, but there are some steps that they all share. What follows is a general outline of how we make things easier for our clients during their relocation, not instructions on how to domesticate a Delaware corporation to Florida. Please schedule a consultation with our corporate law attorney for guidance specific to your company.

Every process has a plan, and every plan has a process to follow. Every state has its own different steps to follow and requirements to satisfy when domesticating a C or S corporation. What follows is only a general overview and does not account for the specifics of each state.

When our firm is hired to domesticate a Delaware corporation to Florida, we start by conducting a thorough review and examination of the client’s business. This helps us confirm that the entity is eligible for domestication and gives us the information that we need to create a personalized plan for relocating the company whole protecting its corporate identity. It’s also useful for preventing problems before they arise.

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

  • Drafting all documents required to domesticate a Delaware corporation to Florida, including the Plan of Domestication;
  • Ensuring compliance with the laws, regulations, and other legal requirements present in both Delaware and Florida;
  • Handling all filings and correspondence with Delaware 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.

How Long Will It Take for FL Patel Law PLLC to Domesticate a Delaware C or S Corporation?

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Managing corporate reorganizations for clients from across the country has given us the experience necessary to domesticate a Delaware corporation to Florida as fast as possible without sacrificing the company’s security. This usually works out to about two to three months due to the processing time required by Delaware and Florida state agencies.

Keep in mind that these state agencies sometimes face their own delays due to short staffing, backlogs, and other issues. These delays will only worsen if you mess up your paperwork and need to file again in order to correct your documents. Working with a law firm can be a big help when it comes to keeping your company’s relocation to Florida on schedule, as we expedite filings whenever possible and know how to get things right on the first try.




How Much Does it Cost to Domesticate a Delaware Corporation to Florida?

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Each state sets its own filing fees for domestications. Florida charges $128.75 and Delaware charges $214.00, coming to a total of $342.75 just to have your documents processed. Of course, that number could grow a lot higher if any of your filings are rejected, as not every state issues refunds.

Our firm offers flat fees for domestication and conversion projects so that our clients can move forward with no need to worry about additional costs throwing off their budgets. Our flat fees are based on the client’s unique needs and the potential complications involved with their move. Schedule a consultation with Attorney Patel now to get a quote for your company’s domestication from Delaware to Florida.

What Are Some of the Dangers of Domesticating a C or S Corporation Without an Attorney’s Assistance?

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Domesticating a corporation to a new state requires a thorough understanding of state law in both jurisdictions and intense attention to detail. There are many ways for it to go wrong, especially if you’ve never handled a transition like this before. The good news is that our legal team has the experience, the knowledge, and the skills needed to successfully domesticate a Delaware corporation to Florida without issue.

If you try to domesticate a Delaware corporation to Florida without an attorney’s advice and guidance, you and your business could both have to contend with risks that include:

  • Noncompliance with state laws
  • Revocation of the Delaware 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 Delaware 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 Delaware corporation to Florida securely, efficiently, and with everyone’s interests protected at every stage of the project.

Make Your Delaware C or S Corporation’s Domestication More Convenient and Secure with FL Patel Law PLLC

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If you attempt to domesticate a Delaware 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 is the best way to avoid interruptions or other problems when relocating your company.

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What Are the Benefits of Domesticating a Delaware C or S Corporation to Florida?

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1. Your company won’t ever have to file with the State of Delaware again if it loses its nexus in that state.

2. When you domesticate a Delaware corporation to Florida, you can network with Florida professional accountants, attorneys, and other service providers who can help take your business to the next level.

3. Our clients often appreciate that domestication enables a smooth transition to Florida without disruptions, delays, or other unwelcome surprises.

4. When you hire us to domesticate a Delaware corporation to Florida, your company’s original incorporation documents will be automatically replaced by Florida Articles of Incorporation drafted by our firm. This means that your company can keep all of the same corporate powers, rights, benefits, exemptions, privileges, and principles.

5. The shareholder’s stock in the company, and the value of that stock, will not change when we domesticate a Delaware 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 Delaware entity’s name for any pending legal procedures or actions.

6. The corporation’s owners don’t need to live in Florida after the company has been domesticated to Florida.

7. When you domesticate a Delaware corporation to Florida, you will no longer need to have a taxable connection, or nexus, back in Delaware. This could potentially reduce what you pay on state income taxes and/or other taxes that the company was responsible for in its previous state. Talk to your tax professional about this, as tax implications will vary from business to business.

8. A company can continue using the same EIN when we are hired to domesticate a Delaware corporation to Florida. This is because we make sure that only its domicile is changed, which allows the business to retain its corporate identity. The company will still need to continue reporting taxes at the federal level, of course.

9. Another reason that it can be advantageous to domesticate a Delaware corporation to Florida is that it allows the business to continue 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, or legal guidance.

What Tax Implications Can I Expect if I Domesticate a Delaware Corporation to Florida?

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You can probably expect there to be certain tax implications when you domesticate a Delaware corporation to Florida. The specific changes, however, will depend on the business itself. As our legal team can only offer general advice in this area, working with your tax professional on your domestication project is essential. Some things to bring up with them during your consultation include:

  • State Income Tax: Delaware has a state income tax, but Florida does not, which can lower your company’s overall tax burden. However, the company will still have to keep up with its responsibilities at the federal level.
  • Franchise Tax: Another tax that your company could save on by domesticating from Delaware to Florida is franchise tax. Once the C or S corporation has become a Florida entity, it will need to close its account with the Delaware Franchise Tax Department and file any necessary final returns.
  • Nexus: When you domesticate a Delaware corporation to Florida, you might eliminate your company’s nexus (taxable connection) in Delaware, too. However, if that nexus still exists after you relocate your C or S corporation, then the tax laws of both states will apply to your company. This connection can be created by having a physical presence, employees, or otherwise engaging in substantial activities in a specific state.

Should I Hire FL Patel Law PLLC to Domesticate My Delaware C or S Corporation?

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At the conclusion of the project, Attorney Patel hosts a comprehensive consultation to address any final concerns or remaining questions. During this meeting, we also provide the client with a checklist with instructions to help them adapt to their new lives as Florida business owners.

Attorney Patel’s advice and guidance is an invaluable asset when trying to domesticate a Delaware corporation to Florida, but the potential benefits don’t end there. 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.

Don’t risk all the work that you’ve invested into your company by trying to manage your own company’s domestication. 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.




Ready to move on down the east coast and join us in beautiful Florida? To get support for your Delaware corporation’s domestication to Florida from a proven corporate attorney, call (727) 279-5037 now or schedule a consultation using our online calendar.

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