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How to Change the Ownership of an LLC in Florida (Guideline)

Max Smith

Reading Time: 6 minutes

Have you decided to transfer your Florida LLC ownership to your heir or someone else? Then, it will be natural to ask how to change ownership of an LLC in Florida.

You can change the LLC ownership legally. However, you may need to follow a few simple steps. Surely, the steps contain managing official documents that are valuable for your LLC. In fact, you can transfer LLC ownership to another LLC. 

Without further ado, let’s go in-depth about the steps of the LLC ownership transformation.

Here is a step-by-step guide on how to transfer ownership of an LLC in Florida. The steps include the factors and legal procedures involved in changing ownership.

1. Review the Operating Agreement

To start changing the LLC ownership process, review the operating agreement. It is an important document that outlines the LLC structure. Undoubtedly,  regulations for the transfer of ownership interests may exist.

It can record the existing members’ rights, such as whether they can refuse or must approve the process for any restrictions or valuing membership interests.

2. Collect Existing Members' Consent

When you examine the agreement, you may discover that current members’ consent should be collected. So, you will need to communicate with all relevant parties. 

You should collect written consent or approval from each member. It depends on what terms are in the operating agreement.

Moreover, a change in membership interest could be the case. Here, you will need to negotiate terms with the existing members, too.

3. Prepare a Purchase Agreement

A purchase agreement might be applicable here if membership interests are sold. It is a legally binding document. The terms of the sale will be outlined here:

  • Purchase price: Mention the amount the new member will pay.
  • Payment terms: Record the payment schedule and method.
  • Effective date: Specify when the transfer will take effect.

Surely, this agreement will clarify the duties and privileges of both parties (buying and selling).

4. Meet Due Diligence

Investigate the due diligence of the new member or buyer thoroughly. It will help you determine the criteria and requirements outlined in the agreement. This due diligence may include the following:

  • Evaluating the buyer’s ability to shell out per the purchase agreement.
  • Checking the credentials and background of the buyer.
  • Analyzing any possible legal concerns or conflicts of interest.

These will mitigate any risks involving ownership transfers. Also, you will enjoy a smoother transition.

5. Amend the Operating Agreement

You will need to amend your operating agreement in a few situations. For instance, if ownership changes alter the LLC structure or management in a significant way, you will have to reflect on the new ownership arrangement for:

  • Changes in voting rights,
  • Profit distributions,
  • Management responsibilities

Lastly, all of these should be compliant with the Florida LLC laws. So, get help from a professional if required.

6. Update Membership Records

To update the LLC’s membership records, start preparing the paperwork. You can draft a membership interest assignment for this or a transfer document. These may outline:

  • Transfer details: Include ownership percentages or units.
  • Involved parties: Clarify the seller and buyer members’ identification.
  • Effective date: Specify when the transfer takes effect.

Lastly, this membership record document is proof of the ownership transfer.

7. File Articles of Amendment with the State of Florida

You should file Articles of Amendment with the Florida Division of Corporations. This act officially changes the ownership of the LLC. The Articles of Amendment (Form LLC-2.01) are the primary form. Moreover, this form can be sent by mail or submitted online.

When you file, provide the following information:

  • LLC name.
  • Florida document number.
  • Nature of the amendment (the change in ownership or structure).
  • The effective date of the amendment.

8. Pay Filing Fees

Remember to pay the required filing fee. The current cost is $25 in Florida for the Articles of Amendment. You can pay it online using a credit card. Moreover, you can also pay it by check if you file it by mail.

Furthermore, always ensure that the fee is accurate. Also, pay any additional fees if necessary.

9. Update the Federal Tax Identification Number (EIN)

When you update the ownership information after changing it, record the LLC’s Employer Identification Number (EIN). It is for federal tax purposes. You can usually do this by filing Form SS-4. It is the Application for Employer Identification Number.

The process can be completed with the Internal Revenue Service (IRS). While it is in process, provide information on the LLC’s ownership structure. Also, give members information for accurate tax reporting moving forward.

10. Update Local Business Licenses and Permits

Your Florida LLC must have some business licenses and permits that are required. Review them to update them and show the ownership change. To do this, update the LLC’s registration and ownership information.

Contact the relevant local government agencies for the process. You need to comply with the local business licensing requirements. It will help you to maintain your LLC’s legal status.

11. Notify Creditors and Service Providers

When you are about to change ownership of your LLC, notify a few parties—for example, creditors, banks, insurers, and service providers. Please give them updated information on ownership. Besides, make sure the contracts and agreements reflect the revised structure, too.

Following this necessary step will help you in the future. It can help to avoid disruptions in services or financial arrangements.

12. Consider the Tax Implications

There are tax implications to be considered while changing LLC ownership. It is for both the selling and buying parties. Consult a qualified tax advisor if you need help understanding the tax consequences.

Among other considerations, the key ones are:

  • Capital gains taxes on the sale of membership interests.
  • Distribution of profits and losses among LLC members.
  • Possible changes to post-transfer tax filing requirements.

If you need the answer to how to transfer LLC ownership in Florida, these twelve steps should be followed. But we always advise you to seek legal advice from a qualified attorney specializing in business law.

Now you know the process of a Florida LLC ownership change. But can you give that ownership to another LLC? Can an LLC be the owner at all? Let’s find out.

Can an LLC Own Another LLC in Florida?

Yes, an LLC can absolutely own another LLC in Florida.

This ownership structure is permissible. It is widely used for a variety of business objectives. Here, the LLC that owns another LLC is called the “parent LLC.” The owned LLC is referred to as the “subsidiary LLC.”

However, it is natural to wonder how an LLC can own another LLC. Here is an explanation of how this ownership arrangement works.

Corporation ownership is divided among shareholders. However, in an LLC, ownership is divided into membership interests. They contribute assets, cash, or services to the LLC. In return, they receive ownership units.

An LLC is a legal entity. It can hold an ownership interest in another LLC just like any other member. This is because there is no requirement for members to be individuals. An LLC can own another LLC and have voting rights, profit sharing, and liability allocation.

The Florida LLC rules are no different. In this state, an LLC can absolutely own another LLC.

Conclusion​

In the end, we hope you got the idea of how to change ownership of an LLC in Florida. The steps discussed above are to maintain legal compliance and smooth business continuity. So, do follow our guide and go through the process with confidence.

Even if the ownership is for another LLC, it can be done, too. As we have explained, an LLC is a legal entity that can be treated like any other LLC member in Florida. In fact, changing ownership facilities is another benefit of an LLC in Florida.

Lastly, an expert service provider in Florida can help you pass the steps correctly and efficiently.

Key Points

  • Steps to Change Ownership of an LLC in Florida:
    • Review the operating agreement to understand the rules on ownership transfer.
    • Collect existing members’ consent for ownership transfers.
    • Prepare a purchase agreement to outline ownership transfer terms.
    • Meet due diligence on the buyer’s suitability.
    • Amend the operating agreement to reflect the ownership change.
    • Update membership records by preparing official documents.
    • File Articles of Amendment with the State of Florida to officially change ownership.
    • You can pay the filing fees either by mail or online. The fee is $25.
    • Update the Federal Tax Identification Number (EIN) to update ownership information.
    • Update local business licenses and permits with relevant local government agencies.
    • Notify creditors and service providers about the ownership change.
    • Consider the tax implications and consult a professional advisor.
  • LLCs can own other LLCs in Florida. The LLC is the “parent LLC,” and the owned LLC is the “subsidiary LLC.”

Frequently Asked Questions

Is it possible to transfer property to an LLC in Florida?

It is possible to transfer property to an LLC in Florida. You can transfer your personal property to your LLC to save it from personal liabilities. 

What are the Articles of Amendment, LLC, Florida?

The Articles of Amendment is a form used to change any terms or rules in the Articles of Organization. It’s also known as the Certificate of Amendment.

What is the LLC transfer of ownership form?

You can use a Form 8822-B. It’s used for a “Change of Address or Responsible Party—Business.” When you start processing the ownership transfer, you must use the form to apply officially, change ownership, and notify others.

Max Smith - LLC Formation

He is a seasoned entrepreneur and legal expert at LLC Formation Hub. With a stellar track record in both business and law, Max simplifies the complexities of LLCs. His practical insights, featured on LLC Formation Hub, empower entrepreneurs across the USA. Max merges business finesse with legal acuity to guide businesses toward success.


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