How Do You Relocate a Business Entity?

Preparing to relocate your business to another state requires more than following a moving checklist. You must plan for how you will relocate your business entity. There are three options available to incorporated businesses for changing their state of formation.

Dissolving the existing LLC or corporation in its original state of incorporation. Then, incorporating or forming an LLC in the new state.
Merging the old LLC or corporation with an LLC or corporation formed in a new state.
Filing a foreign qualification.

1. Dissolution and Formation

Dissolving a business means formally closing the business with its state of incorporation. It is necessary to end the legal existence of your business in a state where it no longer plans to do business. Otherwise, the state of incorporation will consider the business to still be active. As a result, the business must pay state fees and taxes and file annual reports.

Dissolving a business, while a voluntary action, requires all members to agree on the decision. You may return to key documents, such as an LLC’s operating agreement or corporate bylaws for a corporation, to determine the protocol for properly dissolving the business. Generally, a meeting is held where members vote to dissolve and minutes are taken on the resolution’s outcome.

Once you receive majority vote to dissolve the entity, follow the necessary steps for dissolving the business. This includes filing articles of dissolution with the current Secretary of State, sending notices and cancellations in a dissolution proposal, paying back creditors, settling debts, and distributing assets accordingly to owners and members.

After a successful dissolution, the owners or members may form a new corporation or LLC in the new state. Remember to follow the rules presented by the new Secretary of State to ensure your new LLC or corporation stays in compliance in its new state of formation.

2. Merger

Not sure if filing a dissolution is the best decision for your corporation or LLC? You may choose to change a state of formation using a merger.

A merger is essentially a reorganization. You would form a corporation or LLC in the new state where you plan to do business. Then, you would merge the old corporation or LLC into the new entity formation. The old LLC ceases to exist. Its owners become the owners of the new LLC and its assets vest in the new LLC.

Most states have laws which permit entity formations, like LLCs, to merge into another LLC. If you’re interested in potentially using a merger, you will need to follow the guidelines placed by the new state of incorporation’s LLC and corporation laws.

3. Foreign Qualification

What if neither option sounds like a fit for your business? What if you are relocating to a new state to do business, but plan to keep doing business in your old state?

There’s another alternative available. Rather than change your state of formation, you can file a foreign qualification in the new state.

Filing a foreign qualification allows you to keep your old entity, like an LLC, and register it as a foreign LLC in the new state.

A foreign entity will need to obtain a certificate of authority from its existing Secretary of State. This document shows the business is authorized to do business in a state different from its state of formation. You will need to obtain a certificate of good standing from the Secretary of State. This acts as proof your business is in good standing with its state of incorporation. Pay the filing fees during the registration process.

Do I Need to Do Anything Else?

Changing the state of formation is just the beginning for small businesses relocating to new states. Here are a few additional housekeeping areas:

Cancel local business licenses and permits. Apply for new business licenses and permits in your new state.
Close your existing business bank account. Reopen another account. (This is only applicable if your bank is regional and does not have nationwide branches.)
Apply for a new DBA in the new state. Withdraw your existing DBA from the old state.
Alert authorities at the federal and state level. Reach out to the IRS with Form 8822 and the local Secretary of State with your up-to-date business address.

Relocate a business entity with MyCorporation. Contact MyCorporation at mycorporation.com or give us a call at 877-692-6772.

Deborah Sweeney

Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With extensive experience in the field of corporate and intellectual property law, Deborah provides insightful commentary on the benefits of incorporation and trademark registration.

Education: Deborah received her Juris Doctor and Master of Business Administration degrees from Pepperdine University, and has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in corporate and intellectual property law.

Experience: After becoming a partner at LA-based law firm, Michel & Robinson, she became an in-house attorney for MyCorporation, formerly a division in Intuit. She took the company private in 2009 and after 10 years of entrepreneurship sold the company to Deluxe Corporation. Deborah is also well-recognized for her written work online as a contributing writer with some of the top business and entrepreneurial blogging sites including Forbes, Business Insider, SCORE, and Fox Business, among others.

Fun facts/Other pursuits: Originally from Southern California, Deborah enjoys spending time with her husband and two sons, Benjamin and Christopher, and practicing Pilates. Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Deborah, and MyCorporation, have previously been honored by the San Fernando Valley Business Journal’s List of the Valley’s Largest Women-Owned Businesses in 2012. MyCorporation received the Stevie Award for Best Women-Owned Business in 2011.