By: Rima Suleiman
If you’re looking to relocate your corporation to Florida, you generally have three options to choose from. These options, along with each of their pros and cons, are outlined below:
1. Conversion;
2. Dissolving your business and forming a new Florida Corporation; or
3. Keeping your corporation in your home state and Registering a Foreign Corporation in Florida.
1.Conversion:
In Florida, conversion is the process of changing a foreign (out-of-state) entity into a domestic one (one based in Florida). Conversion permits the company to continue the day-to-day operations without any significant interruptions. When properly executed, this process ensures seamless continuation of operations while facilitating a smooth transfer of company to Florida. Continuity is ensured by the preservation of all aspects of the corporate entity’s identity, including bank accounts, credit rating, public records, and tax ID number. To file for Florida conversion, and have your company converted to a Florida corporation, you will need to do the following:
- Determine whether your state will recognize the conversion
- You can only convert your corporation in Florida if your current state of incorporation recognizes the legal process of domestication. Pursuant to FL Stat § 607.11933, the conversion must be “approved by the eligible entity in accordance with its organic law.” Please note that your conversion may also not be recognized by your current state if your corporation is not in good standing due to delinquent annual report filings or other issues.
- Write a Plan of Conversion
- A plan of conversion is an internal document drafted by the shareholders of your corporation that formally approves the conversion process on behalf of your corporation. The plan will need to detail how ownership will be allocated as the corporation transfers from your original state to Florida. Shareholders will all need to vote in simple majority to approve conversion.
- Submit Articles of Conversion
- In your Florida Articles of Conversion, you’ll need to list several pieces of information, including: the business name, type of entity (corporation), State where it first incorporated, date of incorporation, new name of the Florida corporation, effective date, and a signature of a corporate director, officer or incorporator. To file the Florida Articles of Conversion, you will need to submit the Articles of Conversion packet (including a cover letter) either by mail or in person delivery. Florida does not currently offer online filing of conversion documents.
- Submit Articles of Incorporation
- You must include new Florida Articles of Incorporation for your Florida corporation when you file your Articles of Conversion. The Florida Articles of Conversion packet includes Articles of Incorporation.
- Pay Filing Fees
- The cost to convert your company to a Florida corporation is $105, to file for Articles of Conversion is $35, and to file for Articles of Incorporation is $70.
- Dissolve the corporation in your home state
- Once conversion of your corporation in Florida is completed, you’ll need to dissolve your corporation in its home state or jurisdiction.
2.Dissolving your business and forming a new Florida Corporation:
Some states do not allow conversion of a corporate entity that was formed elsewhere in the US. Instead, the owner may be required to dissolve the former corporation and establish an entirely different one in the new state. With this option comes additional administrative work, including the need to close bank accounts and apply for a new tax ID number. To form a new corporation, you must file Articles of Incorporation with the Florida Department of State Division of Corporations (along with a filing fee). The articles must include a valid corporate name, which must include a suffix such as “corporation” or “incorporated,” must list the number of authorized shares of stock for your corporation, the address of your corporation’s principal place of business, and the name, address and signature of the incorporator.
3.Keeping your corporation in your home state and registering a Foreign Corporation in Florida:
Alternatively, you can leave your business in your former state and register it as a foreign corporation in Florida. This allows you to maintain your corporate status in your former state, while also allowing you to transact business in Florida. Functioning as a foreign business entity is usually the quickest way to maintain business continuity in Florida. This option is preferable if the business has continuing operations in its original state, or the owner ultimately plans to return to the state where the company was established or bequeath it to another of that state’s residents or family members. However, please note that foreign entity status may limit flexibility or create bookkeeping hassles by keeping the company anchored elsewhere.
To register as a foreign corporation, you must file an Application by Foreign Corporation for Authorization to Transact Business in Florida with the Florida Department of State. The form includes information such as the name of your corporation and location of your main office, and it must be accompanied by a filing fee, certificate of existence, or certificate of good standing from your corporation’s home state.
DISCLAIMER
Attorney Erum Siddiqui Kistemaker is the managing shareholder at Kistemaker Business Law Group. Kistemaker Business Law Group is a Boutique law firm with a strong dedication to delivering comprehensive legal counsel to business and corporate entities throughout Florida. Our business lawyers represent entrepreneurs, corporations, green companies, tech companies, as well as buyers and sellers of businesses large and small. Our office is in Ormond Beach, and you can visit our website at /. Please note, the information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Kistemaker Business Law Group or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have any questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisement or this column.
