Although many people do not know it, it is possible to change ownership of an LLC in Florida by following a set of specific procedures.
Making any changes to an LLC requires a professional approach, as mistakes can be extremely costly. Hence, it is essential to work with an expert business attorney. In this article, you will discover how to change ownership of an LLC in Florida.
Owning a Limited Liability Company in Florida – Explaining the Structure
Once an entrepreneur or a group of entrepreneurs register an LLC in Florida, it is automatically considered as a pass-through entity. This way, all the business’s income or profit “passes through” the company to its member(s) returns.
This process avoids double taxation, as the member(s) pay all due taxes at the individual level. While sole-member LLCs can be taxed as sole proprietorships, multi-member LLCs are a bit different.
In such cases, the members have two different options to deal with the business taxation – either choose to be taxed as a C-corporation or as an S-corporation.
Accordingly, when the members of an LLC choose to deal with the business taxes as a C-corporation, none of the taxes associated with the LLC will pass through to the members’ personal returns.
However, when the members of an LLC choose to deal with the business taxes as an S-corporation, all the taxes associated with the LLC will pass through to each member’s personal taxes.
In a multi-member LLC, each member (owner) owns a percentage of the company. In the business jargon, it is called a membership interest. When the LLC is either taking on new members or changing ownership, it is necessary to transfer these membership interests.
How do I Change Ownership of an LLC in Florida? – Step-by-Step
If you want to change ownership of an LLC, it is possible to do it privately without a public filing. Hence, it is possible to change the members or managers of an LLC in Florida by altering its operating agreement.
To determine who is authorized to make changes to the operating agreement depends upon whether the members or managers are responsible for managing the limited liability company.
When the owners in a member-managed LLC want to remove a member, all owners must prepare a new operating agreement with a new list of members and sign it all together. It is crucial noting that the member being removed needs to sign the new agreement as well.
To add a new member to an LLC in Florida, the process is similar. The only difference is that instead of removing a member, the new agreement will include a new one.
If an LLC does not have an operating agreement, Chapter 605 of the Florida Statutes – also known as Florida’s Revised Limited Liability Company Act – governs the process of changing ownership of an LLC.
Under the Act, a member of an LLC may depart at any time. Also, other members can forcibly remove another member if their conduct harms the business activity.
Whether your company has an operating agreement in place or not, it is fundamental to work with an expert business attorney when changing ownership of an LLC in Florida.
Changing Ownership of an LLC in Florida – In Detail
Although members are not required to file any changes in ownership of an LLC with the State of Florida, they must make it public. Hence, they can report the changes in ownership either by filing Articles of Amendment or an Amended Annual Report.
To amend the Articles of Organization for an LLC in Florida, its member(s) must file Articles of Amendment with the Department of State – Division of Corporations. It is possible to submit the paperwork (including a cover letter and a $25 filing fee) by mail or in person.
To file an Amended Annual Report, you can visit the SunBiz website and follow the same instructions for filing an annual report.
Before starting the filing process, you need to find the document number on the same website to proceed with the update. On the website, it is possible to update/change an LLC’s information, such as adding a new member/manager to an LLC.
Filing an amended annual report requires a $50 fee if you have already filed a regular annual report. If not, the fee is $138.75. After filing the report, the agency will take one to five business days to process the update.
How do I Change Ownership of an LLC in Florida? – Work with Jurado and Associates, P.A. Today
It is essential to work with an expert business attorney when changing ownership of an LLC in Florida. Call Attorney Romy B. Jurado, Esq. at (305) 921-0976 or send an email at Romy@juradolawfirm.com to schedule a consultation.