What Are the Risks of Domesticating or Converting an Idaho LLC to a Florida LLC?

Relocating, Domiciling, Transferring, or Converting a Idaho LLC to a Florida LLC

Updated: August 23, 2023
Reading Time: 10 Minutes

Objectives:

• Domicile an Idaho Limited Liability Company (LLC) to Florida;
• Maintain the same EIN and identity of the LLC; and
• Enjoy tax benefits provided to Florida residents.

Entities:

• Idaho Limited Liability Companies (LLCs)

Table of Contents

• What is a Conversion or Domestication?
• Does Idaho Allow LLCs to Move Out of State?
• Is My Idaho 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 Idaho 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 Idaho 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 Idaho LLC to a Florida LLC?
• What Are the Tax Implications of Converting My Idaho LLC to a Florida LLC?
• Should I Work With Attorney Patel to Convert My Idaho LLC to a Florida LLC?

Because Florida demands fewer taxes from its business owners, LLCs from across the country – including Idaho – are looking to relocate to the Sunshine State. Of course, our state has many other potential benefits to offer entrepreneurs as well. However, relocating to Florida doesn’t have to mean giving up your LLC or its corporate identity thanks to a legal process known as statutory conversion.

A project as complex as converting an Idaho LLC to a Florida LLC can be a dangerous undertaking if you don’t have the right legal guidance, but FL Patel Law PLLC has the skills and the experience necessary to 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.

This article will lay out some of the steps that our firm takes to ensure your company’s security during its transition, along with how our refined process can actually reduce costs and make things more convenient for you, too. It also has some words of warning about what can go wrong if you try to convert an Idaho LLC to a Florida LLC on your own, as well as some of the many ways that working with an attorney can prevent these problems from impacting your company in the first place.

Failing to follow each state’s requirements for statutory conversion can lead to a great deal of pain for your LLC and its members. The consequences here range from fines to the inadvertent dissolution of your LLC. Teaming up with us allows you to benefit from our deep familiarity with these transitions, which ultimately keeps your company safer during its conversion from an Idaho LLC to a Florida LLC. Keep reading to find out more about the benefits of hiring our firm for your company’s relocation, as well as some of the dangers of moving forward alone.

Statutory conversion is a method that eligible LLCs can use to move to a new state by legally changing their formation state. For example, an Idaho LLC can move to Florida by using statutory conversion to become a Florida LLC.

This process is often referred to as “domestication,” “conversion,” or “transfer” when the entity is converting to a different state. These terms can often be used interchangeably.

Converting an Idaho LLC to a Florida LLC allows your business to keep the same identity. It won’t interrupt your business’s continuity, either, assuming everything is done correctly. Because of this, the Idaho LLC’s rights, assets, privileges, and liabilities will automatically transfer to the resulting Florida entity. It also makes it easier to maintain relationships, contracts, and licenses that are important to your company.

After you domesticate an Idaho LLC to Florida, the business will be governed by the Florida Revised Limited Liability Company Act. It’s important to know, however, that there are some situations where the Idaho Uniform Limited Liability Company Act will continue to apply to your company as well, such as if it has a foreign qualification or still has a nexus back in Idaho. This is one of the things that you should bring up during your initial consultation.

Yes, Section 30-22-501 allows the conversion of an Idaho LLC to a Florida LLC, or to any other state with similar laws authorizing the move. Idaho corporations can become Florida corporations by taking advantage of a similar legal process commonly known as domestication.

The only way that your entity will be dissolved when converting an Idaho LLC to a Florida LLC is if mistakes are made because an attorney wasn’t hired to oversee the project. Your converted entity is the same business that it was before, just with a new official state of formation. Be cautious when reviewing other sources online, too, because some incorrectly list dissolution as a necessary part of the process. This is wrong – your company should only be dissolved when you’re ready to shut it down once and for all.

Although ultimately determined on a case-by-case basis, the Internal Revenue Service (IRS) typically allows a company to continue using the same EIN so long as certain conditions are satisfied. Perhaps most importantly, the IRS must consider your company to be the same entity both before and after its conversion from an Idaho LLC to a Florida LLC. This requires maintaining its continuity during the transition and making no other changes to the company’s identity other than its new domicile.

Although every conversion and domestication has its own unique requirements, our firm has developed a core set of steps that we use to successfully relocate companies from other states to Florida. What follows is a summary of those core steps, not instructions on how to convert an Idaho LLC to a Florida LLC. For that level of professional and personalized direction, schedule your initial consultation now.

Converting an Idaho LLC to a Florida LLC with our firm begins with an initial consultation and an assessment of the client’s company. This helps us confirm that this is the best available relocation method and gives us the information we need to prevent problems before they pose a threat to the business or its members.

The support and guidance that we provide when converting an Idaho LLC to a Florida LLC 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 Idaho and Florida state agencies
• Updating the LLC’s operating agreement and other corporate documents to reflect its conversion from an Idaho LLC to a Florida LLC
• A comprehensive consultation to address final concerns and questions

Another of the many advantages of working with our firm is knowing that your company’s conversion will be completed as quickly as possible thanks to our refined inner processes and wealth of experience. For most LLCs, this will be about two or three months, although more time might be required depending on your business’s size and its assets. Without an attorney, there’s no way to guarantee a timely relocation to Florida when converting an Idaho LLC to a Florida LLC.

Because state agencies in Florida and Idaho will each need several weeks of processing time, any mistakes that you make during your conversion can set your company’s move back significantly. Keep in mind that these agencies often face their own delays, too, whether it’s because of backlogs, short staffing, or other issues. Getting things right on the first try isn’t just a matter of keeping expenses down – it’s essential to keeping your company’s conversion from an Idaho LLC to a Florida LLC on schedule as well.

Florida’s filing fee for conversions is $155.00. Iowa, on the other hand, charges $30.00 dollars if the filing is typed and $50.00 if it is filled out by hand. This means that you’ll have to pay at least $185.00 just to have your paperwork processed when converting an Iowa LLC to a Florida LLC. In addition to other expenses associated with your move, be aware that mistakes can drive your costs even higher, especially if your company’s continuity is disrupted.

FL Patel Law PLLC’s clients receive flat fees for our conversion services based on the specific demands of the project. Our legal team’s expertise enables us to prevent unexpected expenses during your company’s relocation to Florida, too. Schedule your initial consultation with Attorney Patel now to get your quote for converting an Iowa LLC to a Florida LLC.

Attempting to convert your own Idaho LLC to a Florida LLC doesn’t just place your business at risk – you and your fellow members could also face problems of your own if something goes wrong while relocating your company from state to state. Only a law firm such as our own can provide your company with the protection that it deserves.

Some of the problems that you can expose your company and its members to when trying to convert a company without attorney oversight 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, then the members could be taxed on the gained value.
• Title of Asset Issues – Another benefit of converting an Idaho 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.

Keep in mind that, despite its length, the preceding list was not comprehensive. These are only some of the problems that can result from a defective 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 Idaho LLC to a Florida LLC.

Working with an attorney as experienced and knowledgeable as ours is the best way to ensure success when moving a company across state lines. The risks of moving forward without the right legal guidance range from fines to the outright dissolution of your LLC, which could cost you all the time, energy, and effort that you and your fellow members have invested in it so far.

1. Your company won’t be responsible for filing with the State of Idaho anymore if it no longer has a nexus (taxable connection) there after its conversion is complete.

2. As a Florida LLC owner, you can work with Florida professional accountants, attorneys, or service providers who can help augment your business operations.

3. Your business’s continuity won’t be interrupted during its transition from an Iowa LLC to a Florida LLC.

4. Florida Articles of Organization will replace your original Idaho formation documents immediately upon their filing. This helps ensure that the Florida LLC retains all of the same powers, rights, benefits, exemptions, privileges, and principles that it enjoyed back in Idaho.

5. Membership interest will remain unchanged by your company’s conversion. This process also transfers the Idaho LLC’s real estate and other property rights to the Florida LLC. However, the same goes for any liabilities or lawsuits as well. Any pending legal procedures or actions can be substituted with the name of the Florida LLC.

6. The Florida LLC’s owners aren’t required to be Florida residents.

7. Because your Florida LLC doesn’t need to have a nexus in Idaho, it can potentially save money on state income taxes and/or other taxes that it was required to pay in its previous state. This is something to discuss with your tax professional, as the consequences will be different for each business.

8. Converting an Idaho LLC to a Florida LLC won’t change its EIN, just its state of formation.

9. Your Florida LLC will also be able to continue using the same bank accounts, the same taxpayer ID, the same operations, and the same contracts that it did as an Idaho LLC. However, careful planning should be undertaken before starting your conversion to ensure that this is the case.

The tax consequences of moving your company to a new state will vary from business to business, which can make things tough to navigate without professional assistance. Because our firm can only give general advice in these areas, a tax professional’s help is just as important as an attorney’s when it comes to the success of your conversion. A few topics to start with during your consultation with them might include:

• State Income Tax: Florida’s lack of a state income tax is highly appreciated by many of our clients relocating from states like Idaho that issue one on top of the income tax already in place at the federal level. This is just one of the ways that your company’s tax responsibilities could be reduced by converting an Idaho LLC to a Florida LLC.

• Franchise Tax: Another tax that LLCs are responsible for in Idaho that isn’t issued by the State of Florida is franchise tax. The LLC will need to close its account with the Idaho State Tax Commission and file final returns if required.

• Nexus: Although Florida’s tax laws are a big draw for companies relocating to our state, keep in mind that your company will still need to follow Idaho tax laws as well if it still has a nexus in its original formation state. A nexus exists in any state where a company has a physical presence, employees, and/or conducts substantial activities.

Working with us allows you to benefit from Attorney Patel’s vast experience as both a lawyer and an entrepreneur. Our law firm is focused around making lives easier for Florida business owners, which means that we have many services that your company could find advantageous, if not necessary, after its conversion from an Idaho LLC to a Florida LLC.

At the end of each conversion project, Attorney Patel hosts a final meeting to address any remaining questions. We also use this opportunity to present our clients with a useful checklist with instructions to help guide them through their new responsibilities as Florida LLC owners.

The various risks of trying to convert an Idaho LLC to a Florida LLC without legal oversight have the potential not just to hurt your operations, but to shut them down for good. By trusting your company’s transition to our attorney, you won’t need to worry about making the kinds of mistakes that could dissolve your LLC or even impact you personally. Schedule with us now so that you can have more time to focus on your business while we handle its relocation.

Ready to embrace life on the East Coast by moving your Idaho LLC down to beautiful Florida? Don’t risk your business’s continuity by attempting to convert your Idaho LLC to a Florida LLC on your own– enlist the help of an experienced business domestication attorney by calling (727) 279-5037 or by scheduling an appointment with us through our online calendar.

Image by Scukrov from Canva.