Tag Archives: limited liability companies

May 1, 2017 Deadline to File Annual Reports with Florida Department of State for Corporations, LLCs, and Other Business Entities

May 1, 2017 is the deadline for filing 2017 Florida Annual Uniform Business Reports for Florida business entities and non-Florida entities registered in Florida. The Florida Department of State will impose a $400 non-negotiable late fee for each entity that files its Annual Report after May 1, 2017. Failure to file a Florida Annual Report for 2017 will result in the administrative dissolution or revocation of an entity in September 2017.

You can electronically file Annual Reports at the Florida Department of State’s website:  www.sunbiz.org.

Even if you have a professional registered agent, it is your responsibility to file the annual report. If you need assistance, please contact us.

The S Corporation Inversion – How to Convert an S Corporation into a Tax Partnership Tax-Free

Tax inversions have been in the news for several years now, but almost always in the context of a public US company reincorporating in a foreign country to achieve lower tax rates on non-US source income. However, there is another type of inversion, the S corporation inversion, that does not involve any foreign countries but can be an elegant solution to a problem faced my many small and medium-sized businesses operated as S corporations.

Many businesses start as S corporations for good tax reasons, but later in their lifecycle want to convert to a tax partnership (such as an LLC taxed as a partnership) for a variety of business and tax reasons. For example, perhaps a private equity fund or foreign investor (which are both impermissible S corporation shareholders) want to invest in the business and become owners. Another example is where an S corporation wants to grant an equity interest to a key employee in exchange for their past and future services. Oftentimes, the best approach in this case is to grant the employee a “profits interest” in the business, but S corporations cannot grant such interests, while tax partnerships can. Simply converting or merging the S corporation into an LLC taxed as a partnership is not satisfactory, because that transaction would trigger the taxable liquidation of the S corporation.

One method to convert to a tax partnership tax-free, without undergoing an inversion, is the “LLC drop-down,” which entails the S corporation forming a wholly-owned LLC, that is initially a disregarded entity for tax purposes, and transferring all of the S corporation’s assets and business to the new LLC. Once this is accomplished, the new investors can invest in the business by investing into the new LLC, which will become a tax partnership. However, this restructuring is deceptively simple, because migrating the S corporation’s business to the new LLC can create many issues, including (1) migrating employees, payroll, and benefit plans to the new LLC; (2) opening new operating and payroll bank accounts for the new LLC; (3) consulting with insurance agents to obtain coverage for the new LLC; (4) assigning customer, lease, vendor, and other key agreements to the new LLC, which oftentimes requires the counterparty’s consent; (5) transferring or obtaining new licenses and permits for the new LLC to operate the business; and (6) obtaining lender consent.

These headaches can oftentimes be avoided by utilizing an S corporation inversion. The S corporation inversion is accomplished by having the shareholders of the S corporation (“Old S”) transfer their stock to a newly formed S corporation (“New S”) in exchange for all the stock of New S. Old S immediately makes an election to be a qualified subchapter S subsidiary, and so Old S will be disregarded for tax purposes. New S then forms a wholly-owned LLC, which is initially disregarded for tax purposes, and then merges Old S into the new LLC, with new LLC as the survivor of the merger. The merger is without tax consequences, because it’s a merger of two entities, Old S and LLC, that are disregarded for tax purposes. Furthermore, by operation of the Florida merger statute, all of the assets, liabilities, contracts, and legal relationships of Old S transfer to LLC and in most circumstances no third party consents are required. Now the old business is in a new LLC that can take on new investors in a tax partnership format and without many of the headaches of migrating a business to a new legal entity. For guidance on this structure, see Treasury Regulation Section 1.1361-5(b)(c), Example 2.

Michael J. Wilson
mwilson@williamsparker.com
941-536-2043

May 1, 2016 Deadline to File Annual Reports With Florida Department of State for Corporations, LLCs, and Other Business Entities

The Florida Department of State deadline for filing a 2016 Florida Annual Uniform Business Report for Florida business entities and non-Florida entities registered in Florida is May 1, 2016. A non-negotiable late fee of $400 will be added to the Department of State fee for entities that file their Florida Annual Report after May 1, 2016. Failure to file a Florida Annual Report for 2016 will result in the administrative dissolution or revocation of an entity in September 2016.

May 1 falls on a Sunday this year.  To reduce the risk of a problem filing on a non-business day, we recommend filing by Friday, April 29, 2016.

Annual Reports must be electronically filed at the Florida Department of State’s website:  www.sunbiz.org.

Even if you have a professional registered agent, it is your responsibility to file the annual report. If you need assistance, please contact us.

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

Final Reminder: May 1, 2015 Deadline to File Annual Reports With Florida Department of State for Corporations, LLCs, and Other Business Entities

The Florida Department of State deadline for filing a 2015 Florida Annual Uniform Business Report for Florida business entities and non-Florida entities registered in Florida is May 1, 2015. A non-negotiable late fee of $400 will be added to the Department of State fee for entities that file their Florida Annual Report after May 1, 2015. Failure to file a Florida Annual Report for 2015 will result in the administrative dissolution or revocation of an entity in September 2015.

Annual Reports must be electronically filed at the Florida Department of State’s website:
www.sunbiz.org.

Even if you have a professional registered agent, it is your responsibility to file the annual report. If you need assistance, please contact us.

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

May 1, 2015 Deadline to File Annual Reports With Florida Department of State for Corporations, LLCs, and Other Business Entities

The Florida Department of State deadline for filing a 2015 Florida Annual Uniform Business Report for Florida business entities and non-Florida entities registered in Florida is May 1, 2015. A non-negotiable late fee of $400 will be added to the Department of State fee for entities that file their Florida Annual Report after May 1, 2015. Failure to file a Florida Annual Report for 2015 will result in the administrative dissolution or revocation of an entity in September 2015.

Annual Reports must be electronically filed at the Florida Department of State’s website:
www.sunbiz.org.

Even if you have a professional registered agent, it is your responsibility to file the annual report. If you need assistance, please contact us.

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

May 1, 2014 Deadline to File Annual Reports With Florida Department of State for Corporations, LLCs, and Other Business Entities

The Florida Department of State deadline for filing a 2014 Florida Annual Uniform Business Report for Florida business entities and non-Florida entities registered in Florida is May 1, 2014. A non-negotiable late fee of $400 will be added to the Department of State fee for entities that file their Florida Annual Report after May 1, 2014. Failure to file a Florida Annual Report for 2014 will result in the administrative dissolution or revocation of an entity in September 2014.

Annual Reports must be electronically filed at the Florida Department of State’s website: www.sunbiz.org.

Even if you have a professional registered agent, it is your responsibility to file the annual report. If you need assistance, please contact us.

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

May 1, 2014 Florida Business Entity Filing Deadline to Avoid Nonwaivable Penalty – 2014 Florida Annual Uniform Business Reports

The Florida Department of State deadline for filing a 2014 Florida Annual Uniform Business Report for Florida business entities and non-Florida entities registered in Florida is May 1, 2014. A non-negotiable late fee of $400 will be added to the Department of State fee for entities that file their Florida Annual Report after May 1, 2014. Failure to file a Florida Annual Report for 2014 will result in the administrative dissolution or revocation of an entity in September 2014.

Annual Reports must be electronically filed at the Florida Department of State’s website: www.sunbiz.org.

Even if you have a professional registered agent, it is your responsibility to file the annual report. If you need assistance, please contact us.

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037