Moving your LLC to another state
Updated: Oct 2
Three routes, and they're not equivalent.
Keep the original entity and register it to do business in the new state. Simplest option. You now have two states' filing obligations and fees, and you're still governed by the original state's law.
Fine if you genuinely operate in both. Wasteful if you've fully relocated.
Domesticate or convert
Some states allow an entity to convert to that state's entity, generally keeping the same entity with continuous existence. This usually means your EIN, contracts, and bank accounts carry over.
Availability depends on both states permitting it, and the requirements vary.
Dissolve and re-form
Wind up the old entity and start a new one. Blunt, and it has consequences: a new EIN, contracts that may need assigning, bank accounts reopened, licenses reapplied for. And potentially a taxable event, depending on what's inside the entity.
The tax question people miss
Moving an entity can be tax-neutral or expensive depending on how it's done. If the entity holds appreciated assets, the wrong route can trigger a bill nobody warned you about.
Someone asked me once whether moving to another state meant selling the company's goodwill and equipment to the new entity. That's a real question with a real answer, and getting it wrong is costly.
What to check before choosing
Does the destination state allow domestication from your current state? What happens to your EIN? What's inside the entity that could trigger gain on a transfer? What contracts, licenses, and loans reference the current entity by name and state?
What to do
Decide first whether you're expanding or relocating. Expanding usually means foreign registration. Relocating usually means domestication, if it's available.
Either way, look at the tax consequences before you file anything. This is one of the few areas where the order of operations changes the bill.
Getting the sequence right is a restructuring tax analysis, and it costs less than getting it wrong.
This is general information, not legal advice for your situation. If you want an answer for your business, book a consultation.
