Entrepreneurship comes with its own set of perks — one of which is being able to manage your business wherever you choose. Perhaps you are moving to lower your cost of living, be closer to family or you simply want to explore another area of the country. Regardless of the reason, it’s important to know your options when moving an LLC to another state.
The process varies by business and by state, so you need to first establish your goals and then look into the rules for the state you are moving to. If you’re not sure where to begin with changing your LLC address, this article is meant to help you distinguish which option best fits your needs.
Consider Your Options
You have decided to move your business and are excited to embark on this next chapter — now what? Before you move, consider consulting an attorney in your new state to handle some of the logistical details and ensure the transition is both seamless and meets the new state requirements.
Essentially, you have three options to move your LLC to another location:
- Transfer an LLC from One State to Another for a Permanent Move
- Keep an Old LLC and Register in a New State for a Temporary Move
- Dissolve an Old LLC and Create a New One for a Fresh Start
Transfer an LLC from One State to Another
The process of transferring an LLC to another state is known as domestication. This may be the easiest and best way to handle an LLC move, especially if your move will be permanent. However, not all states allow it, so you will need to check if domestication is permitted in both states. Here is a list of states that allow domestication:
You create a domesticated LLC by obtaining a certificate of good standing from the old state and filing it, along with articles of domestication, with the secretary of state or other agency in charge of business filings in your new state. You’ll then need to dissolve the LLC in the old state.
Domesticating provides several benefits including keeping the same bank accounts, tax ID number, credit rating and maintaining previous business relationships. Additionally, you’ll only be located in one state, so you won’t have to meet two states’ LLC requirements like you will need to in the second option below.
Keep an Old LLC and Register in a New State
If your move is temporary or you plan to move back to the original state of operation, consider continuing as an LLC or Corporation in the old state and registering as a foreign corporation doing business in a new state. When you move an LLC to another state, your business is considered a “foreign LLC” in that state.
This option will likely be the most expensive of the three. You will have to pay yearly fees, and you will also need a registered agent in both states to keep up with each state’s LLC filing and reporting requirements. However, if you anticipate changing states again soon, this might be your best bet. You can maintain the same employer identification number, bank accounts and permanent business address while still operating your business in a new location.
To register as a foreign business, check if you meet the criteria for foreign qualification and then submit a form to the state agency responsible for business filings.
Dissolve an Old LLC and Create a New One
If your goal is to form a new business or merge into a new corporation, you must go through the process of dissolving the old one. There are a few different ways to accomplish this: merge the two LLCs, liquidate the old LLC or have the members of the old LLC contribute their membership interests to the new LLC. Because this process is the most complicated of the three options, it’s a good idea to seek assistance from a local business attorney to make the process as painless as possible. Incfile can also ease the burden by doing the dissolution paperwork for you.
Forming a new LLC can be inconvenient because you will have to get a new tax ID number and establish new business accounts. You may also lose the benefit of good credit that your business has built over the years.
However, forming a new LLC might be your best choice if your state does not allow domestication and you do not want to contend with operating an LLC that is formed in one state and registered to do business in another.
Learn the Rules
As we previously noted, different states have different rules. When making the move to a new state, it is important to follow the guidelines for both the state you are moving out of and the state you are moving into. Find out the requirements for forming an LLC in your state. After this, you can properly assess the best option for your business, and be on your way to successfully operating your business in a new state.