Can You 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: March 21, 2023  
Reading Time: 10 Minutes 

Objective:

• 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. 

Entities:

• Limited Liability Companies (LLCs)

Table of Contents

• What is a Conversion or Domestication? 
• Does North Carolina Allow LLCs to Move Out of State? 
• What are the Benefits and Effects of Converting My LLC? 
• How Do I 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? 
• Can I Dissolve My Entity in the State of North Carolina? 
• What Are the Tax Implications of Converting My North Carolina LLC to a Florida LLC? 
• Should I Work with a Lawyer to Convert 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 should look into a corporate transaction known as “statutory conversion,” which is our firm’s preferred method of moving businesses to Florida from out of state.

Statutory conversion is a method available under the Florida statutes that changes an LLC’s state of formation and domiciles it to a new one without major disruptions. The converted entity keeps the same corporate identity for federal tax purposes, too.  

In this article, we’ll review our firm’s process for converting a North Carolina LLC to a Florida LLC. We’ll also discuss some important considerations and potential challenges that can occur when domesticating a North Carolina LLC to the State of Florida. 

Converting a North Carolina LLC to a Florida LLC can open you and your business up to risks and liabilities, so consulting with an attorney and/or tax advisor beforehand can save you a lot of time and trouble down the road. Even simple mistakes made when converting or domesticating a business can push it into compliance with state laws and regulations, which often result in legal penalties, financial losses, and other undesirable consequences. 

It is possible to change a North Carolina LLC to a Florida LLC through a statutory process commonly known as conversion. However, the same process is sometimes known as domestication when it involves moving from one state to another. This method is preferable to dissolving the company and starting over because it replaces the LLC’s formation state without changing its corporate identity, EIN, formation date, rights, assets, privileges, or liabilities. As a result, disruptions can be minimized. 

The Florida Revised Limited Liability Company Act will govern the entity after it converts from a North Carolina LLC to a Florida LLC. It could, however, still be subject to the North Carolina Limited Liability Company Act and other North Carolina State laws if it maintains an economic nexus (taxable connection) and/or has a foreign qualification in that location.  

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.

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 firm likes 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 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 LLC 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 Florida LLC’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 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.  

Conversions often come with legal, tax, and business implications that vary from company to company. Small businesses and solo entrepreneurs are not immune from these complications, either. However, working with experienced Florida attorneys and tax professionals can reduce the risk of costly delays, noncompliance penalties, and other potential obstacles to your conversion.  

Converting a North Carolina LLC to a Florida LLC is done by filing documents in both states. Here is a general overview of what our firm does to help our conversion and domestication clients.  

1. Initial Assessment. Reviewing the structure and operations of the converting entity helps us develop an action plan for domesticating the company that will meet that client’s particular needs. It also ensures that domestication is the right option for their move and helps us head off potential issues before they arise. This review includes going over the LLC’s formation documents and tax structure, confirming North Carolina’s and Florida’s conversion requirements, and looking into the potential tax implications that could come about from the move.  

2. Drafting the Plan of Conversion. A Plan of Conversion, the first document that our firm drafts for conversion clients, is essentially an overview of how the move will take place. It includes both North Carolina’s and Florida’s statutory requirements, how the transaction will be structured for tax purposes, a roster of the company’s members, and instructions on handling membership interest. It will also need to satisfy any and all other requirements under the law in both states.  

3. Plan of Conversion Approval. The Plan of Conversion needs approval from the North Carolina LLC’s members in accordance with the North Carolina Limited Liability Company Act and/or the company’s operating agreement.  

4. Drafting Documents for the State of North Carolina. After the Plan of Conversion has been approved by the North Carolina LLC’s members, then we can prepare the first of two Statements of Conversion. This document will be filed with the State of North Carolina to let them know that the LLC will no longer be domiciled in that state.  

5. Drafting Documents for the State of Florida. The second Statement of Conversion prepared by our firm informs the State of Florida of the converting LLC’s registration. A copy of the LLC’s new Florida Articles of Organization, which will be the business’s new charter under state law, will be included in the filing. 

6. Filing Domestication Documents in Both States. Once the documents are ready and the LLC members have authorized the move, we can start by filing with the State of Florida.  

7. Paying Required Domestication Fees. 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. 

8. Post Conversion/Domestication. Next, we update the converted LLC’s corporate documents to reflect the transition. This includes the LLC’s operating agreement, trademark registrations, and any foreign qualifications that the business has in other states.  

9. Attorney Consultation. 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. It includes tasks like opening new tax accounts and closing out old ones. Your attorney reviews this checklist and answers and addresses any questions that remain after converting the North Carolina LLC to a Florida LLC.  

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. 

No. 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. 

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. The specific changes will vary from business to business, but some general things to look out for are:  

• 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.

• Sales Tax: Sales tax is another area where you might be able to save money by domiciling your LLC to Florida. This is because some parts of North Carolina have their own regional sales tax on top of the state sales tax, while Florida only levies it at the state level. The converted entity needs to register with the Florida Department of Revenue and pay any required sales taxes. 

• Nexus: Although some businesses may lose their nexus in their original state when converting a North Carolina LLC to a Florida LLC, this will not be true for all of them.  

• EIN Number: One of the advantages to using statutory conversion to change a North Carolina LLC to a Florida LLC is that it can continue using the same EIN. This won’t be the case if you dissolve your entity, which can come with tax liabilities as it could be considered liquidated by the IRS.  

Yes. Working with an attorney to relocate your LLC lowers the chance that the project will be derailed by avoidable errors or other roadblocks. It also gives you more time to focus on your operations. You’d be in good company, too, as our firm has been hired to convert, domesticate, or otherwise domicile over 140 other businesses to the State of Florida. The guidance of experienced counsel makes all the difference during a transition like this. Size and industry are no issue for us – our firm has the experience necessary to help convert your North Carolina LLC to a Florida LLC, so contact us today.  

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. 

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