Moving across the country is a big transition in your life. Everything you own is being shipped off to another country, and in some cases, that includes your work as well. If you’re an entrepreneur trying to figure out how to transfer LLC to another state, we’re here to help you plan your move and choose the best option for relocating your business.
Whatever the reason for the move may be (perhaps you’re relocating to a smaller home due to high living costs, or you’re simply in the mood for a change of scenery,) you will have to plan your move. And not only will you have to worry about packing services and long-distance movers, but you will also have to handle your office move. All of that can get overwhelming, so if you want to have a stress-free move, we suggest you take a look at our long-distance moving tips on how to move LLC to another state.
A limited liability company is a business structure exclusive to the US. This kind of business structure protects its owners from having to personally repay the company’s debts or liabilities. Owners, who are usually called members, only have limited liability, and this structure is a perfect combination of corporate and sole proprietorship features.
Moving cross-country to another state requires a lot of planning, and organizing your move is not an easy task. But at least shipping your belongings to another state is easy – all you have to do is hire cross-country moving services and you’re all set. But what should you do if you want to ship your work as well? You should be prepared because transferring an LLC to another state is not such an easy task as it may seem. It’s not exactly the same as corporate relocation. Even though there are many benefits of relocating your LLC, such as not having to find a job before you move and not finding yourself in a situation of relocating without a job, there are also some disadvantages. The biggest one is that this is a fairly complicated process that takes a lot of time and energy to pull off.
The first thing on your to-do list should be to do extensive research. There are a lot of requirements and things to consider when relocating to different states. Once you decide where to live, you have to check out the federal laws. Legal requirements to move your business can be different in different places, as they have different sets of legal rules and filing procedures. There are four methods when it comes to relocating your limited liability company, and some of them are not even allowed in certain states. So, if you were wondering How I can transfer my company from one state to another, here are the four methods you can choose from:
Domestication is a process where you change the address of your company to a location in your future region. It’s not as simple as just choosing a different address across the border. There is a lot of paperwork to file in this process because you need permission from both states, your current one and your future one. You will need a form for domestication from the future one where you were planning to register your LLC. And you will need to file a copy of the original form for dissolution and a certificate of good standing from your current one. The certificate of good standing is not a step you can skip.
Domestication is the most common method used because it has a lot of advantages, such as the fact that out of all four, it’s probably the easiest and fastest way to ship your work across states. Another great thing about it is that you don’t have to go through the fuss of opening bank accounts or getting another employee identification number, and everything you need to do when opening a new enterprise. You get to keep all of its assets; the only thing that will be changing is the location.
The biggest disadvantage of this method is that it’s forbidden in some places by federal law. If you were wondering where should you move if you want to transfer your business, don’t stress, you can always check that on the state’s secretary website. Here are some of the states that allow domestication:
Another option you have at your disposal is registering a new franchise in another place while keeping your current place of work running. That way, your branch will be considered a foreign LLC in other states. It’s definitely the fastest way of transporting your work, but it’s the most expensive one. Besides filing a form and registering at the state’s tax agency, you will have to pay an annual fee as well as other additional taxes. And keep in mind those fees are different in all states. This method is a clear choice for anyone that’s relocating temporarily for a short period of time, no more than a couple of years. They opt for this method, and then they dissolve the company’s franchise once they decide to move back.
The great thing about this method is that you won’t have the additional stress of thinking if your work will fail or fly since you will be keeping the old business at its original address. Another advantage is that you will be keeping all the same attributes like credit scores, identification numbers, clients, bank accounts, and so much more.
However, there are many cons to this option, the biggest one being that it’s expensive to run two businesses. Not only will you have to pay all the regular expenses for both companies, but you will also have to pay an annual fee in the other region. And if you’re relocating to a big city like Los Angeles, that can be pretty pricey since, according to California law, their minimal annual fee for franchise tax is $800. On top of all that, you will also have to hire and pay a reliable agent or a manager to keep your old headquarters up and running. If you have the money and your relocation budget allows it, this method is great for maintaining the integrity of your work.
If you’re someone who knows exactly what they want and are looking for a clean slate, and you’re 100% sure it’s your time to move away and start fresh somewhere else without looking back, this might be the method for you because this way of relocating your enterprise is permanent. It’s not exactly a way of transferring, but if you know you won’t be moving back, it might be best to completely shut down and dissolve your old enterprise and simply register for a new one in your future hometown.
If dissolving businesses is not your regular occurrence, it might be best for you to hire a professional to help you out. Hiring an attorney to handle this operation and explain the legal aspect to you will cost you, but it’s a necessary step since one mistake can cost you a lot more than what you’re paying them.
This will be a complicated process divided into two stages – dissolving the old and registering a new company. The dissolution requirements start by getting written approvals from every member, and after that comes the certificate of dissolution. The next step is taking care of taxes; you need complete tax clearance. The final step in this stage is notifying all interested parties of the upcoming change, like your investors, clients, partners, and so on. The next stage of registration is where it gets a bit easier. All you need is a new tax ID number, and you’re all set. You’ve done this before, and it gets easier each time you go through the process, so don’t worry.
The biggest benefit, in this case, is that you will not have to pay double expenses for two companies. You will get a clean slate, so you can rebrand and change your strategy however you’d like. But a fresh start might also be a downside since you will have to start building your business again from the ground up, and that carries a lot of uncertainty. You might also have to adjust to new regulations and the fact you no longer have a good credit score since you lost all of your previous installments.
If you don’t like the idea of dissolving and having everything you’ve worked so hard for just disappearing without a trace, you will like this option. You can merge the two companies instead of dissolving. States usually have laws that allow this procedure but check laws and regulations since they could be different from place to place. Once you file a legal form for the merger, your old enterprise will be automatically dissolved and merged with the new one. The difference between a merger and a regular dissolution is that all of your old installments and assets will simply be transferred, so you will get to keep your credit score, clients, as well as debt and taxes.
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Your work is your livelihood and your meal ticket, and transferring it carries a lot of uncertainty and stress, especially if you’re starting from the ground up again. So perhaps you should consider employee relocation as a way of calming some of that stress and uncertainty. Having reliable employees you know you can count on at your side will help you a lot in the beginning. You will be going through a big change, so it would be nice to have some constant in your life. Just make sure to be a good employer and offer a relocation package or compensation since you will be relocating their whole lives and family as well.
Relocating your home is tough enough as it is, but with the added bonus of relocating your job as well, it’s a lot for one person to handle. That’s why you have to hire professional cross-country movers to help you move efficiently. With them taking care of your home belongings and organizing your move, you will have more time and energy to focus on transferring your LLC and making it a success.