You may need to move your limited liability company (LLC) to another state. You may want to move or find a state with more favorable LLC regulations. Whatever the reason, you’ll need to take specific steps to ensure your business is fully and legally relocated.
Lucky for you, this guide lays out your options and how each might benefit you and your business.
Register as a Foreign LLC
If you plan to do business in your home state and the new state, you should register as a foreign LLC in the new state. A foreign LLC is an LLC doing business in a state other than the one in which it was initially formed.
For instance, if a T-shirt-selling LLC formed in Nebraska wishes to start doing business in Oklahoma, it must register as a foreign LLC in Oklahoma – and abide by the laws and regulations of both states. It must also follow the reporting requirements and pay taxes in both states.
Registering as a foreign LLC is similar to forming an LLC in your home state. Be sure to check the new state’s procedures, but in general, you’ll need to:
- Choose a registered agent in the state where you will be doing business. Each LLC you register needs a registered agent in that state if the state requires one.
- Check with the secretary of state to learn the new state’s name requirements, and check its website to ensure your LLC’s name is not already taken.
- Check with the secretary of state to see what information is required to form a foreign LLC. You’ll likely need to file an article about an organization that includes the following:
- LLC’s business name
- State where LLC was initially formed and date of formation
- Street address of the original LLC
- Street address of the LLC in the new state
- Name and address of your registered agent
- LLC formation documents from home state
- Fill out and submit your articles of organization and pay the required fee. You should also check if the new state requires an operating agreement.
- Check the new state’s requirements for annual reports and other required filings.
Another Option – Dissolve Your LLC
If you are completely moving to the new state and no longer doing business in your home state, it might be best to dissolve your existing LLC and form a new one.
If you’re the only member of the LLC, dissolution is relatively straightforward. First, your operating agreement should specify how your LLC can be dissolved. Then, you’ll need to file dissolution paperwork with the state, at the very least.
If your LLC has more than one member, dissolution generally requires a vote of the members. Per the operating agreement, you’ll also need to pay all business debts and distribute all assets to members.
If the value of assets distributed to members is more than their original capital contribution, the gains on the assets will be taxable. Once the LLC is dissolved according to the laws of your original state, go ahead and form a new LLC in your new state.
Domestication as an Option
Domestication is the process by which an LLC changes its state of registration. States have different domestication processes, but it usually goes like this:
- Your attorney drafts a plan of conversion, outlining domestication steps
- LLC members approve the plan
- Each state’s domestication documents are filled out
- Forms are filed, and fees paid
- Ensure your newly domesticated LLC is in full compliance with the new state
Domestication can be complex because every state has its laws, and you have to follow the laws of both states, which may conflict. Therefore, the help of an attorney is essential. Once domestication is complete, only the new state’s laws apply to your LLC.
Moving Your LLC Due to More Favorable State Laws
If you want to move your LLC to a new state because it has more favorable business laws than your current state but plans to continue to do business in that state, moving your LLC by any of the above methods is unlikely to help.
You would still need to register as a foreign LLC in your home state and would be subject to the laws and taxes of both states.
Generally, the only reason to fully move your LLC to a new state by domestication or dissolution is if you are moving your business to the new state and no longer doing business in your original state.
Moving your business to a new state is a major process that often gets complicated. Whichever route you choose, involve an attorney to ensure your business gets off on the right foot in your new state.