Are you relocating and looking for credible information about moving your business from one state to another? If you are relocating, you’re most likely going to wonder how to move a business to another state along with yourself and everything else.
There are various ways to go about moving your business from one state to another. Some are easy ways, while others are complex.
In this post, we’ll discuss the different options for moving a company to another state, the pros and cons of each, and what options are best for moving your business from one state to another.
1. Registering your business as a foreign entity in a new state.
If your business is registered in one state and you move to a different state, you may be wondering how to move a business to another state with you. One option is to simply decide to register the business as a foreign entity in the second state.
The second state will, however, require that you qualify before you can register your business as a foreign entity in it.
This is about the easiest way because your business doesn’t really change. It’s just registered as a foreign entity in the second state. With a few forms that are easy to understand and affordable, you can get this done.
The drawback to this option is that since you’re now dealing with two states, if both states have an annual filing requirement, you now have to deal with filing reports and fees for both states.
Say, you are in the state of California moving your business to another state, you will have to file for both the state of California and the new state.
This option is better for people who still have business transactions or any other form of ties with the first state.
However, if you’re completely done with that state and you’re moving to the new state for good, this may not exactly be a great option for you.
2. Dissolve the first company and start a new one in the new state.
This is definitely more difficult than just registering as a foreign entity because you’re creating a whole new business entity.
This process involves dissolving the business LLC in the first state and starting all over. You have to do this to completely transfer LLC to another state.
This means that you basically have to start from scratch, paperwork and all. You lose the history you had in the previous state. This, however, might be better than having to deal with 2 states at the same time if it’s not something you want to do.
3. Domestication or conversion of the company
This involves changing your business from being registered in one state to being registered in another. For instance, simply changing from a Colorado-registered LLC to a California LLC.
The benefit of this option is that you don’t have to create a new business and go through all of the stressful processes that come with it; you’re just changing where the business is registered.
The downside to this option is that it is not supported by every state, and it has to be supported by both states before it can be done. You will also need a plan of conversion or domestication to show the second state’s authority all they need to know about the business.
At the end of the day, this is a great option for moving a company to another state if both states that you’re dealing with support it.
You’re not starting a new business. You’re just transferring the business from one state to another. You do want to update your operating agreement so that it conforms to the laws of the new state.
Next, you’ll file a form with both states letting them know that you have converted from a domestic entity there to a domestic entity here. This option is also great if you want to convert or change your business type. If you want to change from an LLC to a corporation or from a corporation to an LLC, for instance, this is the best option.
The drawback of this domestication is that not every state offers it. And you have to go through filling the forms and paperwork.
If you’re wondering how to move a corporation to another state and the state doesn’t allow domestication, a merger may be a great option that you may like to consider.
How this works is that you file to start a new company in the new state and then you merge it with the existing one. Depending on the terms of the merger, usually, everything contained in the former company will be assumed in the new company. The second company can continue using the EIN, and assume liabilities, contracts, obligations, and so on. This way, you don’t have to start the process and fill out paperwork from the scratch.
Just like domestication, you have to be sure both states allow it.
You also have to prepare documentation containing information about the merger and forms to let the states know that you have merged.
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