How an Attorney can Domesticate or Convert a North Carolina LLC to a Florida LLC
Relocating, Domiciling, Transferring, or Converting a North Carolina LLC to a Florida LLC
Updated: June 5, 2023
Reading Time: 10 Minutes
- Domicile a North Carolina Limited Liability Company (LLC) to Florida;
- Maintain the same EIN and identity for the LLC;
- Enjoy tax benefits provided to Florida residents.
- Limited Liability Companies (LLCs)
Table of Contents
- What is a Conversion or Domestication?
- Does North Carolina Allow LLCs to Move Out of State?
- Is My North Carolina 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 North Carolina 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 North Carolina 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 North Carolina LLC to a Florida LLC?
- What Are the Tax Implications of Converting My North Carolina LLC to a Florida LLC?
North Carolina LLC owners could benefit by relocating to Florida. For example, Florida lacks a state income tax and has a proudly pro-business government, among other advantages and attractions. Those interested in going from a North Carolina LLC to a Florida LLC can do so using a corporate transaction known as “statutory conversion.”
Converting a North Carolina LLC to a Florida LLC is a significant undertaking no matter the size of your business. However, FL Patel Law PLLC’s guidance can 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 the Sunshine State.
This article will touch on some of the dangers associated with an incorrectly executed conversion, which is a major concern if you attempt this transaction without legal assistance. It will also go over how our legal team can protect you from these dangers while saving you time and money, along with some of the other benefits of hiring us to convert your North Carolina LLC to a Florida LLC.
Failing to follow each state’s statutory requirements during a conversion can expose you to personal liability and even liquidate your business. When you hire us, we’ll help you navigate each step of the process and ensure legal and regulatory compliance while also working to prevent delays and other problems. Keep reading to find out more of the risks associated with conducting your own conversion without an attorney’s assistance.
What is a Conversion or Domestication?To top
Statutory conversion is a method that can be used to change a North Carolina LLC into Florida LLC under Florida law.
This process is often referred to as “domestication,” “conversion,” or “transfer” when the entity is converting to a different state. These terms are often used interchangeably.
A business that undergoes a conversion can change its formation state without needing to dissolve and start all over again with a new corporate identity. It’s also a good way to minimize disruptions while preserving relationships, contracts, licenses, rights, assets, privileges, and liabilities. The North Carolina LLC can keep doing business while the process takes place, too.
After converting your North Carolina LLC to a Florida LLC, your business will be governed by the Florida Revised Limited Liability Company Act. However, the LLC still has a nexus in North Carolina, then it may still be subject to the North Carolina Limited Liability Company Act as well. Be sure to talk about this with our attorney.
Does North Carolina Allow Limited Liability Companies (LLCs) to Move Out of State?To top
Yes, under Article 9, Part 3, Section 57D-9-30 of the General Statutes of North Carolina. Corporations looking to convert into Florida businesses, however, must instead domesticate their entity.
An LLC may convert to a different eligible entity if both of the following requirements are met:
(1) The conversion is permitted by the law that will govern the organization and internal affairs of the surviving entity.
(2) The converting LLC complies with the requirements of this Part and to the extent applicable the law that will govern the organization and internal affairs of the surviving entity. (2013-157, s. 2.)
Is My North Carolina Entity Dissolved?To top
No. Converting your North Carolina LLC to a Florida LLC won’t dissolve your business. When searching for your company using North Carolina’s business database after your conversion, your LLC’s status will be listed as “Withdrawn.” See the image below for an example.
Some other websites incorrectly state that initiating dissolution is a part of the domestication process, but this is not true. Unless you’re ready to close for good, dissolution should be avoided at all costs while domiciling to Florida.
Do I Need To Get a New EIN if I Domesticate My Company to Florida?To top
According to the Internal Revenue Service (IRS), LLCs are generally allowed to keep using the same EIN after converting as long as the business’s continuity is maintained and no other changes are made during the move. However, this is ultimately decided on a case-by-case basis.
How Does FL Patel Law PLLC Convert My North Carolina LLC to a Florida LLC?To top
Converting or domesticating an LLC involves a specific sequence of filings and other actions that all businesses must follow, although some details will change from state to state. Keep in mind this is general advice and not for your specific situation. Please schedule a consultation with our attorney for guidance tailored to your business’s unique needs.
First, we review the business’s structure and operations so that we can develop an action plan that will meet our client’s needs. It also ensures that domestication is the right option for their move and helps us head off potential issues before they arise.
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 North Carolina and Florida state agencies
- Updating the LLC’s operating agreement and other corporate documents to reflect its conversion from a North Carolina LLC to a Florida LLC
- A post-conversion consultation to address final concerns and questions
How Long Does It Take To Complete a Domestication or Conversion to the State of Florida?To top
Over the course of over 140 domestications and conversions, our firm has developed an efficient, reliable process that can domicile a business to Florida in about two or three months. We expedite our filings whenever possible and are certain that this is the fastest possible timeline.
State agencies typically need several weeks each to process their documents. Because of this, mistakes can delay the conversion of a North Carolina LLC to a Florida LLC by up to a month or more. Working with a local Florida law firm can reduce the likelihood of such mistakes, some of which could even liquidate your business.
What Are the Costs Involved in Domesticating My North Carolina LLC to the State of Florida?To top
Florida charges $155.00 to convert a North Carolina LLC to a Florida LLC. North Carolina charges $50.00 for this conversion, which comes to a total of $205.00 in filing fees alone. In addition to your other moving expenses, the cost of this project will only be driven higher if you make any mistakes with your paperwork.
Our firm can help ensure that you don’t face any unexpected costs or other unwanted surprises during your move. Our domestication and conversion clients receive flat rates based on the complexity of their project. Schedule an initial consultation with Attorney Patel to review your business and get a quote for your relocation.
What Are Some of the Risks Associated With a Conversion Gone Wrong?To top
Successfully converting a North Carolina LLC to a Florida LLC takes more than filing a few documents. You need to have a deep understanding of the law in both states, great attention to detail, and a decent amount of time if you want to make sure that everything is done the right way. That’s why handing things over to an attorney is a good idea, as it means that you won’t have to worry about making the kinds of mistakes that could liquidate your business.
If you attempt to convert your business without the assistance of a law firm, then you could be exposing both yourself and your business to risks including:
- 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 North Carolina 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.
Again, these are only some of the problems that can arise when mistakes are made when converting a business from one state to another.
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 North Carolina LLC to a Florida LLC.
Increase Your Chances of a Successful ConversionTo top
Your business’s future could be in danger if you try to convert it without attorney oversight. Hiring our firm is the best way to ensure that everything runs smoothly when converting a North Carolina LLC to a Florida LLC.
What Are the Benefits of Converting My North Carolina LLC to a Florida LLC?To top
1. If the LLC stops doing business in its original formation state after converting from a North Carolina LLC to a Florida LLC, then it will no longer have a nexus in that jurisdiction. If this is the case, then the LLC doesn’t need to file with the State of North Carolina ever again, unless it obtains a foreign qualification.
2. Converting a North Carolina LLC to a Florida LLC gives our clients the opportunity to work with and learn from other Florida professionals, such as accountants, lawyers, and more.
3. Our clients like statutory conversions because they enable LLCs to move to Florida without interrupting the company’s continuity or ability to do business.
4. After converting, the LLC’s Florida Articles of Organization will seamlessly replace the preceding North Carolina formation documents. The entity keeps the same powers, rights, benefits, privileges, exemptions, and principles despite this change.
5. Membership interest in the business will not change after it is converted from a North Carolina LLC to a Florida LLC. After the conversion is complete, the company will still have the same property rights, which include real estate. Pending lawsuits and liabilities against the North Carolina LLC will also transfer to the Florida LLC, with the converted entity’s name potentially substituted in for clarification.
6. You do not need to live in Florida after converting a North Carolina LLC to a Florida LLC.
7. Converting your LLC to Florida often removes the business’s taxable connection (nexus) to North Carolina, which could mean savings on state income taxes. Discuss this possibility with your tax advisor, as this will not necessarily be true for every business.
8. Domesticating to Florida by way of statutory conversion often allows a business to keep using the same EIN for taxes and other reporting duties. This is possible because the converted entity is still the same business that operated in North Carolina – only its domicile has changed.
9. Using a conversion to change your North Carolina LLC to a Florida LLC is also advantageous because it allows the business to continue using the same bank accounts, taxpayer ID, operations, and contracts. However, the process should be managed with care to avoid errors or other problems from occurring.
What Are the Tax Implications of Converting My North Carolina LLC to a Florida LLC?To top
Converting a North Carolina LLC to a Florida LLC will likely come with tax implications that you should discuss with your tax professional before making your move. Our firm can only provide general guidance in this area. The specific changes will vary from business to business, but some items to bring up in your meeting with them include:
- State Income Tax: Florida has no state income tax, which is one of the driving reasons behind its popularity among business owners. North Carolina, however, does have a state income tax. In other words, converting a North Carolina LLC to a Florida LLC can save on state income taxes for profits made in Florida, although it will still have to file and pay at the federal level.
- Franchise Tax: Yet another tax that North Carolina has that Florida doesn’t is Franchise Tax. The LLC will need to close its account with the North Carolina Department of Revenue and file final returns if required.
- Nexus: North Carolina LLCs that continue to have a nexus in their old state will still need to follow North Carolina tax laws after converting into Florida LLCs. Generally, nexus is established when a company has a physical presence, employees, or substantial activities in a particular state.
Should I Work With Attorney Patel to Convert My North Carolina LLC to a Florida LLC?To top
The number of ways that your company can benefit from an attorney’s guidance while converting from a North Carolina LLC to a Florida LLC cannot be overstated. Attorney Patel’s knowledge and wealth of experience make him a valuable partner during any major corporate transaction. Remember that, as a corporate law firm, we offer a suite of services to support our clients that could prove useful, if not necessary, to running a business in Florida.
Our firm also provides our conversion clients with a follow-up checklist that will help guide them through their new responsibilities as Florida LLC owners. This is coupled with an exit consultation that allows Attorney Patel to address any questions or concerns that remain after converting the North Carolina LLC to a Florida LLC.
Keep in mind that mistakes made when converting a North Carolina LLC to a Florida LLC can lead to heavy consequences. 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 now and get started.
Are you ready to move your North Carolina LLC down the coast to sunny and beautiful Florida? Don’t risk breaking your business’s stride — get assistance from an experienced business conversion attorney by calling (727) 279-5037, or if you are ready to convert, check out our service page now.