Can You Convert or Domesticate a Michigan Corporation to Florida?
Relocate, Transfer, Convert, or Domesticate a Michigan Corporation to Florida
Updated: July 20, 2023
Reading Time: 10 Minutes
Objectives:
- Domicile a Michigan C or S Corporation to Florida;
- Keep the same EIN and corporate identity; and
- Enjoy tax benefits provided to Florida residents.
Table of Contents
- What is a Domestication, Conversion, or Transfer?
- Can Michigan C or S Corporations Move to Another State?
- Will This Dissolve My Michigan 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 Michigan Corporation to Florida?
- How Long Will It Take for FL Patel Law PLLC to Domesticate a Michigan C or S Corporation?
- How Much Does it Cost to Domesticate a Michigan 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 Michigan C or S Corporation to Florida?
- What Tax Implications Can I Expect if I Domesticate a Michigan Corporation to Florida?
- Should I Hire FL Patel Law PLLC to Domesticate My Michigan C or S Corporation?
Michigan business owners looking to relocate their C or S corporations to Florida might find that their move offers more benefits than just a change in scenery. For example, Florida has no income tax at the state level in addition to many other policies that entrepreneurs find advantageous. This kind of move can be made possible thanks to a kind of corporate transaction known as “domestication.“
Trying to domesticate a Michigan corporation to Florida without experience or legal guidance can be especially daunting. However, FL Patel Law PLLC can help ensure a more secure and convenient relocation for your company that’s free from delays and other 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 domesticate a Michigan corporation to Florida.
This page will help you better understand the steps we take when we domesticate a Michigan corporation to Florida, as well as how our legal team’s refined and efficient methodology can potentially save you time and money. It also has some important warnings about the risks of attempting this project without a corporate attorney’s oversight, and how working with our firm can help protect your business’s corporate identity.
The problems that can result from a failed domestication can mean serious trouble for both you and your C or S corporation. In fact, it could even end in the liquidation of your company. Our firm is ready to assist our clients with everything necessary to domesticate a Michigan corporation to Florida, and our corporate attorney’s expertise means that you can feel more confident and worry less during your company’s move.
What is a Domestication, Conversion, or Transfer?
To topDomestication allows a corporation to change its formation state without giving up their preexisting corporate identity.
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 provides a much more convenient alternative for reincorporating a new entity from the ground up in a new state. Because it allows the business to keep the same corporate identity, all of the Michigan corporation’s rights, assets, privileges, and liabilities will automatically transfer over to the domesticated Florida corporation. This continuity is also essential to maintaining contracts, relationships, and licenses that are important to the company.
The Florida Business Corporation Act (FBCA) will take over as the business’s governing law after its reorganization as a Florida entity is complete. However, both the FBCA and the Michigan Business Corporation Act (MBCA) could still apply to the company if it has a foreign qualification or taxable connection in its original formation state. This is something that you should talk to our corporate attorney about during your consultation.
Can Michigan C or S Corporations Move to Another State?
To topIt’s possible to domesticate a Michigan corporation to Florida under Section 745 of the Michigan Compiled Laws. A similar process called statutory conversion is available to Michigan LLCs looking to relocate to Florida.
Sec. 745. (1) A domestic corporation may convert into a business organization if all of the following requirements are satisfied:
(a) The conversion is permitted by the law that will govern the internal affairs of the business organization after conversion and the surviving business organization complies with that law in converting.
(b) Unless subdivision (d) applies, the board of the domestic corporation proposing to convert adopts a plan of conversion that includes all of the following:
(i) The name of the domestic corporation, the name of the business organization into which the domestic corporation is converting, the type of business organization into which the domestic corporation is converting, identification of the statute that will govern the internal affairs of the surviving business organization, the street address of the surviving business organization, the street address of the domestic corporation if different from the street address of the surviving business organization, and the principal place of business of the surviving business organization.
(ii) For the domestic corporation, the designation and number of outstanding shares of each class and series, specifying the classes and series entitled to vote, each class and series entitled to vote as a class, and, if the number of shares is subject to change before the effective date of the conversion, the manner in which the change may occur.
(iii) The terms and conditions of the proposed conversion, including the manner and basis of converting the shares into ownership interests or obligations of the surviving business organization, into cash, into other consideration that may include ownership interests or obligations of an entity that is not a party to the conversion, or into a combination of cash and other consideration.
(iv) The terms and conditions of the organizational documents that are to govern the surviving business organization.
(v) Any other provisions with respect to the proposed conversion that the board considers necessary or desirable.
(c) If the board adopts the plan of conversion under subdivision (b), the plan of conversion is submitted for approval in the same manner required for a merger under section 703a(2), including the procedures pertaining to dissenters’ rights if any shareholder has the right to dissent under section 762.
(d) If the domestic corporation has not commenced business, has not issued any shares, and has not elected a board, subdivisions (b) and (c) do not apply and the incorporators may approve of the conversion of the corporation into a business organization by unanimous consent. To effect the conversion, the majority of the incorporators must execute and file a certificate of conversion under subdivision (e).
(e) After the plan of conversion is approved under subdivisions (b) and (c) or the conversion is approved under subdivision (d), the domestic corporation files any formation documents required to be filed under the laws governing the internal affairs of the surviving business organization, in the manner prescribed by those laws, and files a certificate of conversion with the administrator. The certificate of conversion shall include all of the following:
(i) Unless subdivision (d) applies, all of the information described in subdivision (b)(i) and (ii) and the manner and basis of converting the shares of the domestic corporation contained in the plan of conversion.
(ii) Unless subdivision (d) applies, a statement that the board has adopted the plan of conversion by the board under subdivision (c), or if subdivision (d) applies to the conversion, a statement that the domestic corporation has not commenced business, has not issued any shares, and has not elected a board and that the plan of conversion was approved by the unanimous consent of the incorporators.
(iii) A statement that the surviving business organization will furnish a copy of the plan of conversion, on request and without cost, to any shareholder of the domestic corporation.
(iv) If approval of the shareholders of the domestic corporation was required, a statement that the plan was approved by the shareholders under subdivision (c).
(v) A statement specifying each assumed name of the domestic corporation to be used by the surviving business organization and authorized under section 217(5).
Mich. Comp. Laws Ann. § 450.1745.
Will This Dissolve My Michigan C or S Corporation?
To topNo, this process won’t dissolve your business, nor is dissolution necessary to domesticate a Michigan corporation to Florida. That said, your company could be dissolved if certain mistakes are made because the project lacked an attorney’s oversight. When done correctly, domestication relocates the business without any disruptions to its continuity.
Do I Need To Get a New EIN if I Domesticate My Company to Florida?
To topThis matter is ultimately decided by the Internal Revenue Service (IRS) on a case-by-case basis. However, if you want to keep using the same EIN, then it’s essential that your C or S corporation’s continuity and corporate identity are kept safe during its move, and no one knows how to do this better than an attorney.
How Can FL Patel Law PLLC Help Domesticate a Michigan Corporation to Florida?
To topThe exact steps necessary to domesticate a Michigan corporation to Florida will depend on the business’ needs and circumstances. Below is a general walkthrough of our process for relocating C and S corporations and Florida, not instructions for doing so. For advice specific to your company’s move, schedule a consultation with our corporate attorney now.
First, we review the corporation to confirm that it’s eligible for domestication. The information gathered at this stage is also critical towards drafting a plan to relocate the company that prevents disruptions and ensures convenience and security for all involved throughout the rest of the project.
The comprehensive support that our clients receive from us when we domesticate a Michigan corporation to Florida includes:
- Drafting all documents required to domesticate a Michigan corporation to Florida, including the Plan of Domestication;
- Ensuring compliance with the laws, regulations, and other legal requirements present in both Michigan and Florida;
- Handling all filings and correspondence with Michigan 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 Michigan C or S Corporation?
To topWhen you domesticate a Michigan corporation to Florida with our firm’s assistance, you can typically expect your project to be finished in about two or three months. This is the fastest possible timeline for this transition, and it’s our firm’s experience and dedication to efficiency that makes this possible.
Working with a law firm to domesticate a Michigan corporation to Florida is essential to keeping its relocation on schedule. State agencies will need several weeks of processing time and often have to deal with backlogs and short staffing, which can cause unavoidable delays. Because of this, any mistakes that need to be corrected could set you back months, which is likely to impact your company’s bottom line.
How Much Does it Cost to Domesticate a Michigan Corporation to Florida?
To topThe first fee that you’ll probably encounter when you domesticate a Michigan corporation will be your filing fees, which are set at the state level. Michigan charges $50.00 to process corporate domestication paperwork and Florida charges $128.75. These come to a total of $178.75 that you can expect to pay in filing fees alone if you want to domesticate a Michigan corporation to Florida.
One of the most expensive costs that can come up during a domestication are the mistakes made by non-attorneys attempting the relocation without legal guidance. We provide flat fees based on the specific project for our conversion and domestication clients, which helps prevent unexpected costs and exceeded budgets. Schedule a consultation with Attorney Patel now to get a quote for your company’s domestication.
What Are Some of the Dangers of Domesticating a C or S Corporation Without an Attorney’s Assistance?
To topA deep familiarity with the relevant state laws procedures will be needed to safely domesticate a Michigan corporation to Florida. Your company might not even survive its move otherwise. 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.
If you don’t have reliable legal guidance to help keep your company safe, the risks of trying to domesticate a Michigan corporation to Florida include:
- Noncompliance with state laws
- Revocation of the Michigan 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.
Remember, the preceding list was not comprehensive. There are many more dangers awaiting business owners with C or S corporations who try to domesticate a Michigan corporation to Florida without the guidance of a corporate attorney with a strong background handling these types of transitions.
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 Michigan corporation to Florida securely, efficiently, and with everyone’s interests protected at every stage of the project.
Make Your Michigan C or S Corporation’s Domestication More Convenient and Secure with FL Patel Law PLLC
To topNow that you know just how bad an imperfect or failed domestication can be for you and your business, it’s vital to do everything possible to protect your interests. Investing in an attorney’s help is one of the best ways to secure your business’s future when you domesticate a Michigan corporation to Florida.
What Are the Benefits of Domesticating a Michigan C or S Corporation to Florida?
To top1. After domesticating, your company won’t need to file with the State of Michigan ever again if it doesn’t have a foreign qualification or nexus in that state after its relocation.
2. When you domesticate a Michigan corporation to Florida, you open yourself up to new opportunities to work with Florida professional accountants, attorneys, and other service providers essential to your business.
3. Hiring our firm to domesticate a Michigan corporation to Florida on your behalf means that you can enjoy the convenience of a secure transition without disruptions or delays.
4. Your company’s initial incorporation documents will be seamlessly replaced by Florida Articles of Incorporation prepared by our firm. Your company will also retain all of its corporate powers, rights, benefits, exemptions, privileges, and principles.
5. When we domesticate a Michigan corporation to Florida, we can ensure that the shareholders will all still have the same amount of stock in the company that they held before the relocation, and the value of that stock will stay the same, too. Real estate and other property rights will be automatically transferred to the domesticated corporation, as will any liabilities or lawsuits as well. The Florida corporation’s name may be substituted in place of the Michigan entity’s name for any pending legal procedures or actions.
6. The C or S corporation’s owners do not need to live in Florida after the company’s move.
7. When you domesticate a Michigan corporation to Florida, you no longer need to have a nexus, or taxable connection, in your company’s initial formation state. This has the potential to lower your company’s tax burden at the state level. Talk to your tax professional about this, as tax implications will vary from business to business.
8. Because only the company’s domicile changes when we domesticate a Michigan corporation to Florida, your business can continue using the EIN it was initially issued after its move. The domesticated entity is still the same entity that existed in Michigan, just with a new official state of formation. It will, of course, still need to continue satisfying its tax obligations.
9. Another reason that it can be advantageous to domesticate a Michigan 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.
What Tax Implications Can I Expect if I Domesticate a Michigan Corporation to Florida?
To topWhile there will likely be tax implications that result from your company’s relocation, the specifics will differ from business to 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 Michigan corporation to Florida. A few issues that you should go over with them are:
- State Income Tax: Florida’s lack of a state income tax is one of the most popular perks of relocating a business to our state. Federal tax responsibilities will continue, but this is just one way that you could lower your company’s tax burdens when you domesticate a Michigan corporation to Florida.
- Franchise Tax: Just like state income taxes, corporate franchise taxes are an area where you might be able to save your money if you domesticate a Michigan corporation to Florida. The domesticating corporation needs to close its account with the Michigan Department of Treasury and file final returns if necessary.
- Nexus: Also known as a taxable connection, a nexus is created when a company has a physical presence, employees, or otherwise conducts substantial activities in a specific state. Domestication might break this connection, but if it doesn’t, then your company will need to follow both Florida and Michigan tax laws after its relocation.
Should I Hire FL Patel Law PLLC to Domesticate My Michigan C or S Corporation?
To topOn top of the peace of mind that comes with hiring our firm to domesticate a Michigan 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.
At the end of the project, our clients will have a final consultation with Attorney Patel so that he can address any remaining questions or concerns. A checklist with instructions for new Florida business owners will also be provided to help them adapt to their new home.
A corporate attorney’s guidance can be the deciding factor when trying to domesticate a Michigan corporation to Florida. Because we’ll handle all the legal challenges and complexities in addition to drafting and filing all of your documents, you’ll have more time to focus on what’s important: your business. Schedule now to get started.
Is your Michigan corporation ready to relocate to sunny, tropical Florida? Don’t risk breaking your business’s stride — get assistance from an experienced business domestication attorney by calling (727) 279-5037, or by using our online calendar.
Image by viktorcvetkovic from Canva.com.
Have a Question?
