Converting a C or S Corporation Into a Florida LLC in 2026

Converting a Florida corporation - whether a C corporation or an S corporation - into an LLC is a statutory conversion available under Florida law. For businesses in Tampa Bay and across Florida that want the governance flexibility and pass-through tax simplicity of an LLC without dissolving and reforming from scratch, this process preserves legal continuity while changing the entity type.

The legal mechanics are manageable. The tax consequences are not. Converting from a corporation to an LLC is one of the most tax-complex entity transactions in business law, and the consequences depend heavily on whether the entity is a C corporation or S corporation. This guide covers both paths, what the conversion process requires, and what business owners must address before proceeding.

Why Convert a Corporation to an LLC?

• Simplified governance: Corporations require boards of directors, annual meetings, formal minutes, officer positions, and other governance formalities. LLCs have much more flexible governance under Chapter 605 of the Florida Statutes.
• Pass-through tax treatment: A C corporation faces double taxation - corporate income tax at the entity level plus individual tax on dividends. Converting to an LLC taxed as a partnership or disregarded entity eliminates the entity-level tax for many businesses.
• Management flexibility: LLC operating agreements can be customized to allocate management rights, economic rights, and governance authority in ways that corporate articles and bylaws cannot easily replicate.
• Estate and succession planning: LLC membership interests can be structured for estate planning purposes in ways that give greater flexibility than corporate stock.
• Operational simplicity: Fewer required formalities and a more flexible operating structure reduce administrative burden, particularly for small and closely held businesses.

Statutory Conversion Under Florida Chapters 607 and 605

Florida's statutory conversion process is governed by Section 607.11931 (for corporations converting to another entity type) and Section 605.1045 (for LLCs receiving an inbound conversion). Together, these provisions create a clean, one-step conversion process that preserves the entity's legal identity - no dissolution, no new EIN, no gap in contractual continuity.

After conversion, the resulting LLC succeeds to all of the corporation's assets, contracts, rights, and liabilities. The corporation ceases to exist as a corporation and continues as a Florida LLC governed by Chapter 605.

Step 1: Plan of Conversion Requirements

The conversion begins with a Plan of Conversion - a written document that sets out the terms of the transaction. Under Florida Statute Section 607.11931, the Plan of Conversion must include:

• The name and form of the converting entity (the corporation)
• The name, form, and jurisdiction of the converted entity (the LLC)
• The manner and basis for converting shares into membership interests (or cash, other consideration, or cancellation)
• The full text of the Articles of Organization for the new LLC
• Any other terms or conditions the corporation determines to include

The Plan of Conversion defines how each class of corporate stock maps to LLC membership interests. For a simple conversion of a single-class corporation owned by one or two shareholders, this is straightforward. For corporations with multiple classes of stock, preferred shares, or option holders, the conversion mechanics require more careful planning.

Step 2: Shareholder Approval

A conversion from a corporation to an LLC requires shareholder approval. Under Florida Statute Section 607.11931, the Plan of Conversion must be submitted to the shareholders for a vote. The vote threshold is the same as required for a merger under the corporation's articles, bylaws, and Florida law - typically a majority or two-thirds of the outstanding voting shares, depending on the corporation's governing documents.

Shareholders who vote against the conversion have dissenter's rights (appraisal rights) under Florida Statute Section 607.1302. This allows dissenting shareholders to demand fair value for their shares rather than receiving membership interests in the converted LLC. The existence of appraisal rights is a significant consideration in closely held corporations where minority shareholders may oppose the conversion.

Step 3: Filing with the Florida Division of Corporations

After shareholder approval, file the conversion documents with the Florida Division of Corporations through Sunbiz.org. The filing includes:

• Articles of Conversion (or Statement of Conversion, depending on form)
• Articles of Organization for the new Florida LLC
• The filing fee: $35 for the conversion (as of current fee schedules) plus $125 for the Articles of Organization

The conversion takes effect on the filing date or a later effective date specified in the filing. Standard processing through the Division of Corporations takes 3-5 business days. Expedited processing is available for additional fees.

Tax Consequences: C Corporation Conversion

Converting a C corporation to an LLC is one of the most tax-expensive entity transactions available. The IRS treats the conversion as a deemed liquidation of the C corporation under IRC Section 331, followed by a deemed contribution of assets to the new LLC.

The C corporation recognizes gain or loss on all of its assets as if they were sold at fair market value on the date of conversion. This gain is taxed at the corporate level at the 21% federal corporate income tax rate (plus Florida's 5.5% state corporate income tax). The shareholders then recognize a second level of gain on the liquidating distribution - taxed as capital gain or ordinary income depending on the character of each asset.

This double tax on a C corporation conversion is often prohibitive. For a C corporation with significant appreciated assets (real estate, equipment, goodwill, intellectual property), the tax cost of conversion can consume a large portion of the equity value being preserved.

Exception - the built-in gains concern even for long-held assets: C corporations that have been in existence for many years may have substantial built-in gains on appreciated assets. There is no way to avoid the entity-level gain on conversion from a C corporation except by strategies that involve disposing of the appreciated assets in a different transaction structure. Tax planning must occur well before the conversion.

Tax Consequences: S Corporation Conversion

Converting an S corporation to an LLC is generally more tax-favorable than converting a C corporation, but it still requires careful analysis.

The IRS treats the conversion of an S corporation to an LLC as a deemed liquidation under IRC Section 332 (if the LLC is wholly owned by one shareholder) or Section 331 (if multiple shareholders). The key difference from a C corporation: S corporation shareholders already have increased basis in their stock from the pass-through of corporate income, which reduces the gain recognized on conversion.

Built-in gains from the S election period: If the corporation was previously a C corporation and converted to S corporation status within the last 5 years, the built-in gains tax under IRC Section 1374 may apply. This provision taxes S corporations on gains attributable to appreciation that existed when the C-to-S election was made.

For S corporations with no significant built-in gains and shareholders with basis generally equal to or greater than their share of LLC asset value, the tax cost of conversion can be minimal. A CPA analysis is required to confirm the specific numbers.

Step 4: Post-Conversion Steps

After the conversion is filed and effective, complete these post-conversion steps:

• Draft the LLC Operating Agreement: The new LLC needs a comprehensive operating agreement reflecting the management structure, ownership percentages (converted from share percentages), profit and loss allocations, and governance provisions.
• Update the IRS: If the LLC's tax treatment changes (from C corporation to partnership or disregarded entity), file Form 8832 (Entity Classification Election) or confirm with your CPA that the conversion automatically changes the tax classification.
• Update bank accounts and financial institutions: Provide the new LLC formation documents to banks, lenders, and financial institutions. The EIN does not change, but the entity type documentation needs to be updated.
• Notify contract counterparties: For contracts with change-of-entity-type provisions or assignment restrictions, notify counterparties of the conversion as required.
• Update licenses and registrations: Professional licenses, local business tax receipts, and state regulatory registrations may need to be updated to reflect the new entity type.
• Cancel corporate shares and issue membership interests: Document the conversion of outstanding corporate shares into LLC membership interests per the Plan of Conversion.