How to Start a Business When You Are Moving to Another State

Are you trying to start a business when moving to another state, or thinking about setting up a business in another state before you live there? Moving to a new residence can be stressful, and the challenges are even bigger if you’re trying to start a new business and form an LLC while relocating your home. But don’t worry – there are various options for setting up a business in another state by using the power of foreign LLCs.

What Is a Foreign LLC?

The word “foreign LLC” might sound unusual — but it’s a typical part of establishing legal business entities in the U.S. If you are trying to start a business when moving to another state, you might need to set up a foreign LLC in the other “new” state where you will be moving (instead of a “domestic LLC” that exists within the same state where you reside).

How Do I Start My Business When Moving to Another State?

Depending on the timing and circumstances of your move and your goals for your business, there are a few options to choose from when setting up a business in another state.

1. Register Your Existing LLC as a “Foreign LLC” in Your New State

If you are planning on moving to a new state sometime within the next year, you can keep your existing LLC if you’ve already started a business and set up an LLC in the state where you currently reside. All you have to do is file paperwork with the new state and register your existing LLC as a “foreign LLC” in your new state — meaning it is an out-of-state LLC.

This option gives you the convenience of being able to keep your current LLC in the state where you’re already doing business, and helps avoid the risk of temporarily going without liability protection if your LLC falls out of good standing with regulatory authorities. However, you will have to deal with reporting and compliance requirements for multiple states — so make sure you can handle your business filings and meet the deadlines for both states.

2. Transfer Your LLC From One State to Another

after you move to your new state, another option is to transfer your LLC from one state to another. This is also known as “domestication,” because you are taking a “foreign” (out-of-state) LLC and are making it “domestic” in the new state. This will let you keep the same tax ID number, business bank accounts, business credit history, and other details related to doing business — without having to change everything for the new state.

However, not all states allow domestication of LLCs. Check out this article on moving LLCs to another state for more details.

3. Establish a New LLC in Your New State

If you haven’t already started your business in your current state, you might want to consider waiting to start your business until you’ve moved. That way, you can start fresh and set up your LLC in the new state of residence, without the hassle of additional filing requirements or managing two LLC entities in two separate states.

If you have already started an LLC and are doing business in your current state, you can dissolve your current LLC and start a new one after your move. According to the Small Business Administration, there are typically no tax consequences to this. However, if you need to be able to continuously stay in business without taking time off during your move, you might not want to dissolve your existing LLC.

4. Merge Your Original LLC Into Your New One

Another option when moving is to set up a new LLC in the new state, and then merge your old/existing LLC from your previous state into the new LLC. This gives you the advantage of not having an interruption in your business operations, and you can keep your existing Employer ID Number.

There are a few other considerations to keep in mind when setting up a business in another state. If your LLC has multiple members, this makes the process more complex. You will typically need to keep each member’s LLC ownership level consistent in the new state, or else you might have to pay extra taxes. Consider consulting an attorney if you have specific questions about the tax implications or ownership structure of your LLC.

Moving to another state can be an exciting change in your life. But it doesn’t have to hold you back from starting a business or continuing the operations of your existing company. Consider your options, make sure you understand the state-specific requirements of forming an LLC, and get professional advice if you need help with moving your LLC to another state.

Are you ready to start a business, form an LLC or reorganize your current business structure with incorporation services? Talk to Incfile today! Our incorporation experts can help you evaluate your options with state-specific advice.

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Ben Gran

Ben Gran is a freelance writer from Des Moines, Iowa. Ben has written for Fortune 500 companies, the Governor of Iowa (who now serves as U.S. Secretary of Agriculture), the U.S. Secretary of the Navy, and many corporate clients. He writes about entrepreneurship, technology, food and other areas of great personal interest.
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