If you’re wondering how to move your limited liability company (LLC) to another state, you have options. We’ll show you 4 ways to do it.
First, we’ll look at what it means to transfer a business to another state — and why you might want to do that. Then we’ll provide an overview of what steps are involved in moving a business to another state. Finally, we’ll walk you through 4 methods to transfer an LLC to another state.
What Does It Mean to Move an LLC to Another State?
Moving an LLC to another state involves moving your company’s principal place of business to another state or registering to do business in another state.
This can involve different methods:
- Organizing your LLC in another state and dissolving it in your original state
- Registering to do business in a state different than the one your company is organized in
- Forming a new LLC in a different state
- Merging your existing company into a new LLC located in a different state
When you move your principal place of business to another state, the process is called domesticating or redomesticating your business in the new state. When you register to do business in a different state, the process is called registering as a foreign LLC, meaning that your LLC is foreign to that state and native to a different state.
Can You Transfer a Business License to Another State?
When you move your business to another state by domesticating or registering as a foreign LLC, you can retain the federal employer identification number (EIN) you use with the Internal Revenue Service, as this is a federal identification code rather than a state-specific one. However, if you form a new LLC or merge into a new LLC when moving, you’ll be creating a new EIN for the new entity rather than transferring a business license.
Regardless of which method you use to move your business, any state-specific licenses and permits must be applied for in the new state. For example, if you’re a building contractor, you’ll need any licenses and permits required by your new state.
What Are Some Reasons for Relocating a Business to Another State?
There are several reasons you may want to move your LLC to another state:
- You could save money on taxes by organizing your LLC in a different state than the one where you do business
- Changes in the tax or economic climate of the state where you organized your LLC have made moving desirable
- Opportunities have opened up in another state, but you don’t want to shut down your business because you want to retain some benefits of maintaining it, such as your business credit history
- You maintain a bank account, physical facilities, staff or equipment in a different state
- You’ve obtained a business license to operate in another state and you need to register for legal and tax compliance
- You have regular meetings with managers, investors or clients in another state
- You need to move your business to another state temporarily
Any of these scenarios and others might prompt you to wonder, “Can I use my LLC in another state?” The answer is yes.
What Are the Steps in Moving Your Business to a New Location?
While there are several methods you can use to move an LLC to another state, they all boil down to a couple of essentials:
- Starting up your business in your new state
- Complying with any obligations in your old state
The steps involved in starting up your business in a new state essentially are similar to those involved in organizing a new business. You’ll need to verify your business name isn’t currently in use in your new state, complete registration paperwork, obtain any required licenses and pay any required fees.
Depending on what method you’re using, there are different specifics involved in these steps. Note that not all states allow domestication or merging, so if you’re using these methods, one step is to verify that you’re allowed to use them in the states you’re moving from and to.
As far as complying with obligations in your old state, if you’re domesticating or merging, you’ll need to dissolve your business in your original state. If you’re registering as a foreign business, you’ll need to continue filing annual reports, paying taxes and maintaining licenses in your original state.
How to Transfer an LLC to Another State: 4 Methods
You can use different methods to relocate your business to a new state:
- Registering as a foreign LLC leaves your business intact in your original state while you begin operations in your new state
- Domesticating your LLC in a new state organizes your business in a new state while dissolving it in your original state
- Forming a new LLC in a new state creates a new legal entity without affecting your existing business
- Merging your LLC into a new business organizes a new business in your new state and dissolves it in your original state
Let’s look at how each of these works and when each of them is useful.
1. Register as a Foreign LLC in a Second State
Each state has its own procedures for registering foreign LLCs. Check with the website of an individual state’s secretary of state for details, or see the state-by-state guide provided by legal website operator Nolo.
In general, you must:
- Contact your original state to obtain a certificate of good standing, which documents that your business entity exists and is current on annual filings and taxes.
- Search to verify whether your current business name is already in use in your new state. If it is, you’ll need to file for an additional business name, called a “doing business as” (DBA) name or fictitious business name.
- Appoint a registered agent who’s located in your new state.
- File an application to do business in your new state.
- Pay an annual fee.
- Obtain any necessary licenses and permits in your new state.
- Continue filing annual reports and taxes, maintaining licenses and permits and paying associated fees in your original state.
There are some scenarios where you might find this method of moving your business useful, including:
- Wanting to continue doing business in your original state
- Seeking to preserve your business identity and history for reasons such as maintaining your EIN or business credit score
- Only planning to move to another state temporarily
The main drawback to this method is that you’ll have to continue filing paperwork and paying fees in your old state.
2. Domesticate Your LLC in a New State
If you want to domesticate your LLC in a new state, you’ll need to:
- Verify that your old and new states allow domestication.
- Verify that your articles of organization allow you to dissolve your LLC, and if so, what dissolution procedures they prescribe.
- Obtain a certificate of good standing from your original state.
- Appoint a registered agent located in your new state.
- File articles of domestication in your new state, organizing your LLC there.
- File articles of dissolution in your original state, dissolving your LLC there in accordance with your articles of organization. This may require your members to vote. You may need to pay off business debts and pay assets to members. You may need to submit your articles of dissolution to your new state.
- Obtain any necessary licenses and permits in your new state.
This option is useful if you have no reason to continue maintaining your business in your original state. By the same token, it may not be your best option if you want to keep doing business in your current location. Other potential problems arise when your current or new states don’t allow domestication, when some of your current members aren’t in favor of dissolution or when your old LLC carries significant debt.
3. Create a New LLC in a New State
This option simply involves setting up a new LLC in your new state, with no legal affiliation with your current LLC. You can continue running your existing business or close it as you see fit.
An advantage of this method is that you don’t have to do anything special with either your current business or your new business. Your new business entity won’t affect your existing entity.
On the downside, you won’t incur any advantages of maintaining your existing business, such as your EIN or credit history. Also, you’ll have to pay fees in all states where you do business.
4. Create a New LLC in Your New State and Merge Your Old LLC into It
A variation on creating a new LLC is to merge your old LLC into your new LLC. This involves a process similar to domestication except that instead of dissolving your current company, you’ll be merging it into your new LLC:
- Verify that your old and new states allow merging LLCs — and, if so, what procedures are required. Normally, you will need to create a plan of merger and have your members vote on it.
- Verify that your articles of organization allow you to merge your LLC — and, if so, what merger procedures they prescribe.
- Create a new LLC in your new state.
- Obtain a certificate of good standing from your original state.
- Appoint a registered agent located in your new state.
- File articles of merger in your new state, following the procedures required by both your states and the articles of organization of both your LLCs.
This method may be a useful alternative if you want to domesticate your business but you can’t for some reason, or if you already own an LLC in another state. Potential problems include legal obstacles in either state, resistance from members and assuming debt from your old LLC.
Use the Right Relocation Method for Your Business
You can use a variety of methods to relocate your business to another state if you want to gain tax advantages, preserve business credit history or move for other reasons. Each method has its pros, cons and best uses.
Registering as a foreign LLC in a new state lets you operate in another state while retaining your existing business, including existing tax and licensing obligations. Domesticating your LLC in a new state dissolves it in your old state, freeing you from future obligations in your original state but potentially requiring you to pay off existing debt. Creating a new LLC is another state lets you start fresh but without the advantages of maintaining your business. Merging into a new LLC offers the benefits of maintaining your business but can require you to assume debt from your original company.
Which of these methods will work best for you depends on the specifics of your situation, including which state you’re in and which state you’re moving to. Consult your company’s legal adviser to help you select the method that’s right for you.
