How to Move Your LLC to Another State in 5 Ways?

Moving an LLC to another state can be painstaking. Whether it’s additional costs, disruptions to operations, or legal compliances, there can be a lot of confusion during the whole process. 

It may seem like a lot, but doola can help you with all your business formation and compliance needs so you can transfer the ownership of your LLC without any hassle.

Fortunately, just like moving to a new home, you have options to choose from. Read on to learn how to move your LLC to another state in five ways that best suit your situation and circumstances. 

Can an LLC Be Transferred to Another State?

An LLC (limited liability company) may be transferred to another state through the process of domestication.

The process may vary from state to state, but it typically requires updating documents and notifying your legal ties to ensure that the transition is communicated to all parties.

5 Ways to Move LLC to Another State

Although transferring your LLC to a new state can be complex, you have several options.

As a business owner, you must determine which option is best for your situation and carefully decide on the next course of action. 

Nonetheless, here are the five ways in which you can move your LLC to another state:

1.  Keep Your Old LLC and Register in a New State 

One way to relocate an LLC to another state is by keeping its registration in the old state while registering as a foreign LLC in the new state.

To do this, you have to file an application with the new state’s Secretary of State, pay the necessary fees, and appoint a registered agent in the new state.

For example, a California LLC looking to expand to Nevada can register as a foreign LLC there. While still governed by California laws, it can operate in Nevada as a foreign LLC.

This approach offers the advantage of preserving your LLC’s legal existence and continuity — which is crucial for maintaining business contracts and relationships.

It’s also simpler and more cost-effective than creating a new LLC or domesticating the existing one. However, this method has some drawbacks.

The LLC will still be subject to the old state’s regulations, which might impose extra compliance obligations. It may also not qualify for certain benefits available to domestic LLCs in the new state.

2. Dissolve Your Old LLC and Start a New LLC in a New State

An alternative method for transitioning your LLC to a new state involves dissolving the current LLC and forming a fresh LLC in the new state.

This process requires filing dissolution paperwork in the original state and setting up a new LLC in the target state, which involves a unique name selection and designating a registered agent for legal correspondence.

This approach’s merits include establishing a clean slate, ensuring compliance with the new state’s laws, and potentially benefiting from minimal setup requirements.

However, you may forfeit the legal protections or benefits of an LLC, and extensive paperwork and communication with creditors, customers, and stakeholders about the changes may be required.

For instance, a Texas-based LLC planning to move to Colorado may find it beneficial to dissolve the original LLC and form a new one in Colorado that is subject to Colorado regulations from the outset.

If you choose this option, you should consider your business’s specific needs and the requirements of the new state, as it may involve additional costs and administrative burdens.

3. Merge Your Old LLC Into a New LLC in a New State

The third way to relocate your LLC is to merge it with a newly formed LLC in the new state. This process involves forming a new LLC in the destination state and integrating the original LLC into it.

The merger will require filing appropriate paperwork in both states, including the Articles of Merger, and securing the approval of the owners and creditors of both LLCs.

This method presents advantages such as starting anew while retaining the existing business contracts and relationships. It may also offer certain tax benefits and open new markets or resources.

However, the merger can be paperwork-intensive and necessitate notifying stakeholders about the changes. It can also be a complex process requiring professional assistance.

For instance, an LLC in Florida planning to move to Indiana could merge with a newly formed LLC in Indiana, retaining its existing business relationships while complying with Indiana’s regulations.

Ultimately, the decision to merge depends on your business’s situation and the new state’s requirements. While this option can be beneficial, it also entails significant paperwork and administrative tasks.

4. Domesticate Your LLC

Domestication is another method of moving your LLC. It involves transferring its legal existence from one state to another.

This process requires filing the necessary paperwork with the new state’s Secretary of State and obtaining approval from both states.

The benefits of domestication include maintaining the continuity of your existing LLC while aligning with the new state’s laws and regulations.

It can preserve business relationships and contracts and can be simpler and more cost-effective than forming a new LLC or merging with another.

However, domestication entails obtaining new licenses, updating your operating agreement, and adhering to specific state tax laws.

This can lead to increased compliance requirements that can be time-consuming and cumbersome. 

You should domesticate your LLC in another state if you want to take advantage of a particular state’s legal protections.

Wyoming has a reputation for offering minimal fees and fewer regulations and formalities — making it a viable option for relocating your LLC.

Seeking legal advice is recommended when contemplating domestication. But the choice ultimately depends on your business specifics and the new state’s regulations. 

5. Apply for Foreign Qualification 

Foreign qualification is the process by which an existing business entity, such as an LLC, registers to do business in a state other than the one in which it was originally formed.

To do so, you must file an application with the Secretary of State and pay the appropriate fees.

The advantage of foreign qualification is that it preserves your LLC’s legal existence and continuity while allowing it to do business in a new state.

It is often easier and less expensive than forming a new LLC or domesticating (similar to registering an old LLC to a new state). 

However, foreign qualification also comes with disadvantages, such as additional compliance requirements, fees, and state-specific tax laws.

It may also exclude you from certain benefits or protections available to domestic LLCs in the new state and involve additional legal management and compliance regulations.

The decision to apply for foreign qualification depends on the specifics of your business and the new state’s regulations. If you are unsure about the legal logistics, consult a business attorney.

Other Compliance Obligations to Consider

Relocating an LLC to a different state entails several compliance requirements for a smooth transition.

To ensure you don’t miss them, here are nine key obligations to keep in mind:

• Register your LLC in the new state by filing the Articles of Organization or Incorporation with the Secretary of State.

• Obtain licenses and permits necessary for business operations in the new state.

• Revise your operating agreement in accordance with the new state’s laws.

• Inform the IRS about the change of address and file a final tax return in the old state.

• Designate a registered agent in the new state to handle your LLC’s legal correspondence.

• Notify stakeholders like creditors, customers, and vendors about the relocation and update contracts accordingly.

• If dissolving your old LLC, file articles of dissolution with the old state’s Secretary of State.

• If merging your old LLC with a new one, secure approval from both states.

• Adhere to the new state’s tax laws, which could involve registering for state and local taxes, obtaining tax ID numbers, and filing tax returns.

Entrusting a professional, such as a business attorney or accountant, can help ensure compliance with legal requirements during your LLC’s relocation. 

Note: Non-compliance can lead to penalties, fines, and legal repercussions that could negatively impact your business.

Move Your LLC to Another State with doola

Moving an LLC to another state involves several steps and compliance obligations, making it a burden. But with doola, you can be sure there is a path that best suits the needs of your business.

Transferring ownership of an LLC requires several steps, planning, and attention to detail. Our team of experts will handle everything, making the transition as smooth as possible.

We offer bookkeeping services tailored for business owners, helping them manage these compliance obligations while also handling their day-to-day bookkeeping needs.

Our experienced bookkeepers can navigate the complex legal requirements of moving your LLC to another state and alleviate some of the legal burdens associated with the move.

Contact us today to learn more about how we can help with your bookkeeping needs.

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