What to Do with Your LLC When You Move to Another State

Relocating your business to another state can be both exciting and daunting. Whether you’re moving to take advantage of better tax policies, expand your market, or change your lifestyle, you can’t afford to overlook the legal and administrative implications of moving your LLC. Neglecting the necessary steps could lead to compliance issues, financial penalties, or even the suspension of your business activities.

This guide will take you through all the essentials of handling your LLC during a state-to-state move. From filing requirements to maintaining compliance, here’s everything you need to know to ensure a smoother transition.

Key Things You Need to Consider Before Moving Your LLC

Before making your move, it’s crucial to understand the legal and practical implications of relocating an LLC (limited liability company). While the specifics vary depending on where you’re moving from and to, here are a few key factors to consider:

• Business licenses and state permits.
• State taxes and their impact on your earnings.
• Differences in filing requirements for LLCs between states.
• The costs related to relocating and restructuring your LLC.

Strategic preparation can save both time and money while ensuring compliance throughout the transition.

Options for Handling Your LLC When Relocating to a New State

When you move your LLC to another state, you typically have three main options to manage the transition. Each option comes with its own set of requirements and implications.

1. Keep Your Existing LLC and Register as a Foreign LLC

One of the easiest ways to maintain your LLC is by registering it as a “foreign LLC” in the new state while keeping your original LLC intact. This option is ideal if you intend to continue doing business in your current state while operating in the new one.

• Pros:
  • No need to dissolve your existing LLC.
  • You can conduct business in multiple states under the same LLC structure.
• Cons:
  • You’ll have ongoing compliance requirements and fees in both the original and new states.

Check the specific requirements of your new state for foreign LLC registration.

2. Domesticate Your LLC to the New State

Domestication involves officially moving your existing LLC from one state to another. Not all states allow domestication, so it’s essential to confirm if this is an option for you.

• Steps
  1. File a Certificate of Domestication (or similar form) in the new state.
  2. Transfer your LLC’s registration to the new state.
  3. Dissolve your LLC in the original state.
• Pros:
  • You retain your LLC’s history, including its Employer Identification Number (EIN) and bank accounts.
  • Simplifies compliance by limiting reporting to one state.
• Cons:
• Can be complex and costly, depending on state filing fees and processes.

3. Dissolve the Existing LLC and Form a New LLC in the New State

If domestication isn’t allowed, you may need to dissolve your existing LLC and create a new one in your destination state.

• Steps:

1. 1. File Articles of Dissolution in your current state.
   2. Establish a new LLC in your destination state.
   3. Notify the IRS of the changes and apply for a new EIN.

• Pros:
  • Clean break from the original state.
  • Fully integrated into the laws and regulations of the new state.
• Cons:
  • Loss of LLC history and EIN.
  • Potentially higher costs if you need to rebrand or handle transfer logistics.

4. Move Your LLC by Asset Purchase.

An asset purchase involves transferring your LLC’s assets to a new entity formed in your destination state. Unlike merging or transferring the entire LLC, this approach allows you to retain control over specific assets while creating a new business identity.

Some benefits of choosing an asset purchase for your LLC’s move include:

• Flexibility in selecting which assets transfer to the new entity.
• Legal simplicity compared to alternative relocation methods.
• Clean exit from your current state’s regulations without lingering obligations.
• Potential to reevaluate and optimize your business structure during the move.

Filing Requirements in Your New State

Regardless of the option you choose, each state has its own regulations for LLC filings and compliance. These are common steps you’ll likely encounter when relocating your LLC:

• Filing Documents:
  • Depending on your chosen method (foreign registration, domestication, or dissolution), you may need to file documents such as Certificates of Domestication, Articles of Incorporation, or Certificate of Authority.

• State Taxes:
  • Research your new state’s tax requirements, especially regarding sales tax, income tax, and franchise tax.
• Update Licenses and Permits:
  • Update any applicable business licenses or permits to reflect your new state of operation.
• Notify the IRS:
  • Notify the IRS of your new business address and file for a new Employer Identification Number (EIN) if needed.

Key Steps for Moving Your LLC to Another State by Asset Purchase

Step 1: Form a New LLC in the Destination State

To start the process, you’ll need to establish a new LLC in the state you’re moving to. This involves selecting a business name, filing the required formation documents with the state’s Secretary of State, and paying the applicable fees.

Be sure to check state-specific filing requirements for LLC formation, such as choosing a registered agent and creating your operating agreement.

Step 2: Identify and Transfer Assets

The heart of the asset purchase process involves identifying the assets you want to transfer from your current LLC to the newly formed one. These assets can include:

• Tangible items like equipment, inventory, or physical property.
• Intangible assets like intellectual property, customer databases, contracts, and trademarks.

Draft an Asset Purchase Agreement (APA) that outlines the terms and conditions of the transfer between the original and new LLC. This legal document will serve as the foundation of the transaction.

Step 3: Close the Current LLC

Once you’ve transferred the assets, your old LLC will no longer serve its purpose. You’ll need to dissolve it by filing Articles of Dissolution with your current state of registration.

Before filing dissolution paperwork, ensure that the original LLC has:

• No outstanding debts or liabilities.
• Paid all state taxes and fees.
• Submitted final financial and operational reports.

Dissolving the old LLC allows you to end operations in the current state cleanly and avoid legal or financial complications.

Step 4: Notify Stakeholders of the Move

Keep all stakeholders informed about the relocation and asset transfer. This includes:

• Customers, so they know where and how you’ll continue providing services or products.
• Vendors, to update contracts and ensure no interruptions in the supply chain.
• Employees, to address changes to employment contracts or offer relocation opportunities.

A clear and timely communication plan helps maintain trust and minimizes disruptions during the transition.

Step 5: Update Licenses, Permits, and Accounts

Relocating via asset purchase involves obtaining new business licenses and permits in your destination state. Make sure your new LLC is fully compliant by:

• Applying for state and local business permits.
• Reestablishing any industry-specific certifications in the new state.
• Updating tax accounts, including income tax, sales tax, and employment tax registrations.

Be sure to close old accounts associated with your previous state to avoid filing errors or duplicated liabilities.

Final Thoughts

Relocating your LLC to a new state doesn’t have to be overwhelming. Let Law 4 Small Business make the entire process easy by utilizing our “Move Your LLC” service. By understanding your options and taking the appropriate steps, you can ensure that your business remains compliant and continues to thrive in its new location.

Need personalized support for moving your LLC? Our team of lawyers, legal assistants and paralegals are here to help! Schedule a consultation today with an attorney to ensure your business relocation is seamless and stress-free.