Want to move your LLC to another state?
Moving your LLC is a suitable option if you want o expand your business, leverage tax advantages, or move to a state with business-friendly laws.
However, the first step to moving your LLC from one state to another is to familiarize yourself with the laws related to relocation. You also need to understand the process.
This step-by-step article will provide you with all the essential information and expert tips you need for a seamless transition.
4 Ways of Moving Your LLC to Another State
There are four options available for moving your LLC to another state.
You can:
- Retain your existing LLC and apply for a foreign qualification in another state.
- Dissolve your existing LLC and register a new LLC in another state.
- Merge your existing LLC with a new LLC in another state.
- Domesticate your LLC in the new state.
Let’s examine these options in some detail.
1. Retain Your Existing LLC and Register as a Foriegn LLC
Keep in mind that if you retain your LLC, you will still be responsible for meeting the tax obligations and paying fees in the state where your LLC was initially formed.
Some states impose significant fees for LLC maintenance. For example, California requires LLC’s organized in/doing business in California to pay $800 annual franchise tax, regardless of their out-of-state business activities.
Here are the steps to follow to register as a foreign LLC in another state:
- Conduct a Business Name Search: To see if your business name is available, you can use business name checking tools that LLC formation companies, such as Inc Authority provide. Read more about this feature in this Inc Authority review by GovDocFiling.
- Appoint a Registered Agent: The registered agent acts as a designated point of contact to receive legal and official documents on behalf of your LLC.
- Obtain a Certificate of Authority: Here are some documents you may need to obtain the Certificate of Authority:
Application for Certificate of Authority, which looks like this:
- Certificate of Good Standing
- Articles of Organization
- Registered Agent Acceptance
- File for Foreign Qualification: The next step is to submit the application for a foreign qualification in the new state. The information you need to provide in the application includes your LLC’s name, the state where it was originally formed, and business address.
The filing fee for foreign qualification applications varies by state. For instance, the foreign qualification application fee in Texas is $750.
2. Dissolve Your Existing LLC and Start a New LLC in Another State
In this case, you will need to follow the procedures outlined in your Operating Agreement or your state’s laws to dissolve your LLC.
Here are the steps involved in dissolution:
- Review the dissolution requirements: Familiarize yourself with the dissolution process of the state where your old LLC was formed. Understand the specific steps, forms, and fees involved.
- Fulfill outstanding obligations: Settle any pending taxes, debts, or legal obligations before proceeding with the dissolution.
- File dissolution documents: Prepare and submit the required dissolution documents to the state where your old LLC was formed.
Once you dissolve your LLC, you can register an LLC in a new state by choosing a business name, filing Articles of Organization, and appointing a Registered Agent.
Many business formation companies offer free EIN application filing along with LLC formation.
3. Merge your Existing LLC With a New LLC in Another State
Combining the existing LLC with a new LLC formed in the desired state allows you to transfer assets, liabilities, and operations to the new entity while ensuring business continuity.
Here’s the process:
- Research State Laws: Understand the laws and regulations governing LLC mergers in both the current state and the state you wish to move to.
- Prepare a Merger Agreement: Your business attorney can help draft a merger agreement that outlines the terms and conditions of the merger.
- File Documents: File the appropriate documents (a certificate of merger or articles of merger) along with any required fees.
- Transfer Assets and Liabilities: Transfer the assets and liabilities, including contracts, leases, licenses, permits, bank accounts, and intellectual property to the new LLC.
You may also need to file the dissolution documents and settle any remaining obligations according to state law.
4. Domesticate Your LLC
Domestication will allow your LLC to continue its operations seamlessly in the new state without having to dissolve and form a new entity.
You’ll need to make sure your current state and the new state allow the domestication or relocation of an LLC.
The general steps involved in domestication are as follows:
- Research State Requirements: Begin by researching the domestication requirements of both the original state and the new state.
- Prepare Domestication Documents: Your attorney or a business formation company prepares the necessary documents for domestication, which may include:
- Articles of Domestication: Draft and file the Articles of Domestication, which outline the LLC’s intent to move its legal domicile from the original state to the new state.
- Pay the required fees: The fee for domestication varies by state. For instance, the fee for domesticating a Delaware LLC to a Texas LLC is $600.
Final Thoughts
Moving your LLC from one state to another is a significant undertaking, but with the right knowledge and guidance, it can be a smooth and successful process.
Consider the tax implications, legal obligations, and business-friendly regulations of your desired state.
We hope the steps outlined in this guide will help you make a seamless transition to a new state.
Consulting with business formation experts can provide valuable assistance throughout the relocation process.
