You may have a lot of reasons to relocate, but if you own a limited liability company, you are left with the predicament of how to transfer LLC to another state. That is, if you plan to move your business with you. There are a few possible options that you can implement in this situation, and you have to determine which one is the best for you.
You can transfer your business to another state, or you can keep the old LLC and register a foreign one for the temporary move to another place. There is also a possibility of dissolving the old enterprise and opening a new one in the other place of residence.
All of these options have a different approach and include certain rules and legal aspects, so tread carefully and consider all the possibilities when transferring your business to another state. And make sure you prepare all of your legal documents on time and start filling them on time. Just don’t forget to get the right tax form for your LLC.
Transfer Your LLC From One State to Another
This process is called domestication. What is important to know is that not all of the states allow domestication, and the procedure includes both states in play, your previous company and the future one. You should check if domestication is possible on both ends. Here are some states that allow domestication of an LLC:
- New Jersey
What this means for you is that you are going to have to fill the form for the certificate of good standing in your previous place of residence and file it. After filing it, you’ll fill the form of domestication for the current one and submit both documents to the agency in charge.
Advantages and Disadvantages of Transferring Your Company
The main advantage is that you will keep most of your installments. You will hold the same bank account, your current credit rating, and tax ID. And if you obtained all those once before, you know how much time you need to spend on getting them for your corporation. The main disadvantage is that it is impossible in some states.
Keep Your Old LLC and Register a New One
If you plan to move out of state on a budget and for a short time, not permanently, maybe your best option is to keep an old company and open a new one in the community you are moving to. You can register as a foreign entity there without dissolving the previous corporation. That has many advantages, but it costs more than double then running a single business. You will have to pay the fees for both of the companies, and for the registered agent who will run the affairs in your absence. You’ll also need to meet all the criteria to form a foreign enterprise in your future place of residence. Some states impose franchise taxes for all the foreign LLCs, so you need to file another tax form.
The Pros and Cons of This Method
The disadvantages of this kind of arrangement are apparent. You need to pay more for holding two companies, that is clear. You need to find a reliable registered agent to run your business back home and pay for his services too. And you need to take care of all legal things. But there are many, not so distinct advantages. You get to keep all the installments of your previous enterprise just the way they are. Be that as it may, this solution is working in your favor only if you plan on returning to your previous place of residence. If you return you’ll have your current account, registered address of the company, tax ID and credit rating waiting for you to lift off from where you left it.
Dissolve Your Old LLC and Register a New One
If you are aiming to move permanently from one state to another and are not keen on paying double taxes, then dissolving your previous enterprise and registering a new one is the best option for you. It is the way to cut costs significantly, as opposed to the previous option. When should you do this? If you are moving your life and business permanently from one place to another and you are not planning to go back to your previous community. Also, if you are not planning to branch your enterprise in multiple states, it is time to dissolve your company. What does this mean for you? This is a process that is better to leave to professionals because omitting even one step can cost you a lot. It is better to seek assistance from an attorney. You are going to have to fill a different tax ID form, different bank accounts for your business, and there is a possibility of losing the good credit rating that you have built through the years.
The Advantages of Starting an LLC in Your New State
While it may seem harder to deal with the paperwork of dissolving one and opening an entirely new LLC, it does have some advantages that will benefit you. First of all, you won’t have to pay double, like in the previous arrangement, especially if you are not planning to return to your prior place of residence. Also, you’ll have the possibility to rebrand if you think that is something that will get your business going in another place. A different state means a lot of different regulations that are not always easy to adjust to. The only disadvantage is that you will lose all the installments of your previous business, but sometimes that is the only option that makes sense.
Merge Your LLC Into Your New One
Instead of dissolving your old LLC, you can simply merge it into your new one. Most states have laws that let you merge one business into another, but you must follow certain procedures of your state.
Articles of the merger need to be filed with the state where your company was formed, not your new one. Filing the articles of the merger will dissolve your old LLC that is being merged into the surviving one. The old one will cease to exist, while all of its property will go into the new one that will now become responsible for any debts, taxes, and liabilities the old one had.
The Process of the Merger
First, you’ll need to create a merger plan. The plan must have the names of each party of the merger, as well as the name of the surviving business into which the old one will be merged. You should also set the terms and conditions of the merger and the address of the surviving entity’s primary place of business.
After you create the plan for the merging, you must get approval for it. The members of the corporation will vote on the merger. If it’s a domestic corporation, then all members need to approve the merger, while foreign ones only need to abide by their state’s percentage of votes.
When the voting finishes, you’ll need to include specific information into the articles of merger. Include the name of the parties that participate in the merger, the jurisdiction of the area where both companies were registered, signatures of the parties, dates of registration and the assertion that the plan of merger received the approval.
How Is This Related to the Success of Your Business
This is a choice that will make or break your fresh start. While each option offers a chance to benefit from a specific opportunity, sometimes it is not so easy to choose. If you are not sure how permanent your move is, maybe you should choose according to expenses.
Check the Most Recent Legislation
What is important to remember is that you do have options. Research each one carefully and consult the professionals to be in the loop with the latest legislation in both places. Sometimes if the legislation changed, the option that was best for you is no longer applicable, or you may benefit more from the other one.
Whichever method you choose, just make sure you abide by legal procedures and file your tax information on time. Just keep in mind that you cannot just abandon your current corporation. There are many steps you need to take, which ultimately depend on the country or state you’re in. So, before you start transferring your business, make sure you have all the documents and get the right tax form for your corporation’s new home.
No matter what option you choose for your enterprise, you will still need the help of professional movers to carry out your relocation. Get professional moving services to help you with your relocation. And don’t forget to ask for a free quote.