Relocation 101: A Guide to Transferring Your LLC to Another State

Relocating your company to another state can offer numerous advantages. You also might be frustrated with where your LLC was originally formed for reasons such as:

• Your home state lacks the consumer base you need to make your business thrive
• There are better tax rules and incentives in other states
• Other states have more business-friendly laws and better liability protection for companies 
• You want your business to be based in a bustling commercial hub

Maybe you’re a small business hoping to make it big in a challenging market like New York. Or maybe you’d like friendlier regulatory restrictions for your business in a laxer state like Nevada. Whatever your reason, relocating your business entity may be a strategic move. The good news is that it’s not as difficult as you may think.

Whether you’re moving because your home state lacks the consumer base needed for your LLC to thrive or because another state offers better tax incentives, 

Are you considering moving your LLC to a new state? Here are four different ways to go about the process and set your business up to start fresh in a new area.

4 Ways To Move Your LLC From One State to Another 

1. The Easy, Straightforward Way: Statutory Business Conversion

The simplest, most seamless way to go about moving your LLC to another state is through statutory conversion, also known as domestication. This process allows you to change your LLC’s home state without altering its identity. 

To do that, you must file the articles of domestication. This document allows you to legally “domesticate” your business in another state. 

Pros:

• You maintain everything about your LLC’s identity except its home state
• It’s straightforward and doesn’t require too many legal documents apart from the articles of domestication
• It’s more cost-effective than methods involving dissolutions and mergers

Cons:

• Not all states recognize statutory conversion. Both the old and new states of your LLC must recognize the process for you to push through with it

1. A Clean Slate: Dissolve the Old LLC and Create a New One

If you want a fresh start for your LLC, consider dissolving your corporation and then forming a new one in the state you want to move it to.

Read your old LLC’s articles of incorporation and operating agreement. One or both of these documents should contain rules on how to dissolve the company. In most cases, this involves the LLC’s members voting on a resolution to dissolve. Remember, the dissolution process varies from state to state and from business to business. 

Then, it’s time to wind down your business by tying up any and all loose ends. This means paying off your business’s debts and distributing any remaining assets to its members. The members are also required to pay income tax on the value of any cash or marketable securities they receive. After these steps are complete, the members of the old LLC can then form a new LLC in the state of your choice.

Pros:

• There’s a complete separation between the two LLCs, so your new one won’t “inherit” the liabilities of the old one
• Cleaner and simpler process than others

Cons:

• It can be a hassle to close shop and fulfill all financial obligations to dissolve a business and start a new one
• Loss of current contracts with partners and vendors
• No continuity as a legal and financial entity

1. Joining Forces: Create a New LLC and Merge It With the Old One

This option still allows you to maintain your old LLC, but this time, it will be merged with a new one in the state you want to move your business to. It basically means forming a new LLC and having it absorb your previous one.

Merging an old LLC into a new one saves you the trouble of dissolving the old LLC. This often requires creating a written plan of merger approved by a vote of the LLC’s members. The articles of merger must then be filed with the LLC’s original state’s Secretary of State office. Filing the articles of merger effectively dissolves the old LLC.

After that is complete, the old LLC will cease to exist, and all its property will vest with the new LLC, which will become responsible for the old LLC’s debts and liabilities.

Pros:

• The old LLC’s identity is kept intact even after the merger
• You retain all your contracts, licenses, assets, and intellectual property from your original LLC
• The transition from your original LLC to the merged company is cleaner
• No hassle of having to dissolve and close down a whole company

Cons:

• Mergers can be expensive thanks to state filing fees, legal fees, and specific tax implications
• Mergers are legally complex and have a long, tedious process that needs meticulous care for a smooth transition

1. Operate in Uncharted Territory: File for Foreign Qualification

Another option is to operate in a new state as a foreign LLC. That means your company keeps its identity, including its domicile state, but can legally operate in another. Registering your LLC as foreign is ideal for companies that want to test the waters in another state without committing to a permanent relocation.

Pros:

• You don’t have to dissolve your existing company
• You can expand your business to another area without forming a new LLC

Cons:

• It’s not a real relocation because you don’t actually change where your LLC resides
• Registering as a foreign LLC requires you to abide by legal and tax requirements from both your home state and the state where you want to operate 

Simplify the Moving Process with the Experts at Inc Authority 

Transferring your LLC can be highly beneficial for your business. New horizons can mean better tax incentives, bigger market penetration, and loads of opportunities for growth you may not be exposed to where it currently is.

Considering moving your business entity to another state but don’t know where to start? There’s no need to be overwhelmed by the process. Contact us and let our experts handle the heavy lifting. Form a new LLC in your dream state with our help today!

Incorporating is the most powerful thing you can do to legitimize your startup. And at IncAuthority.com, our setup LLC services are 100% free. Always. So, don’t wait. Form your new LLC today and enjoy the protection due to you and your business under the law.

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