How to Transfer an LLC to Another State? (In 6 Easy Steps)
Transferring an LLC to another state requires careful planning and adherence to legal procedures. Luckily, there are steps you can follow to navigate the process with confidence and ease.
With extensive expertise in business law and corporate relocations, I have hunted into the intricacies of LLC transfer to another state.
I also invested hours of comprehensive research and consultations with legal experts to ensure the accuracy of the information provided.
In this guide, I'll walk you through the essential steps and considerations in successfully transferring your LLC to a new state.
Quick Summary
- Transferring an LLC to another state involves researching state laws, dissolving the current LLC, registering in the new state, and notifying stakeholders.
- Consider related costs incurred during the transfer, tax implications, and update contracts.
- Between 2005 and 2014, IRS statistics showed a 66% increase in domestic LLCs across the states.
- Drawing from my experience, the complexities of state-specific regulations and the need for meticulous planning in LLC transfers are crucial to navigating the entire process.
6 Steps to Transfer an LLC to Another State
Depending on the state, the transfer may be different.
Business owners must usually follow these stages:
1. Prepare for the Transfer
Before transferring an LLC to a new state, it's crucial to determine if the state allows domestication by researching the laws and regulations of the destination state. Currently, there are 36 states that allow the domestication of companies, including LLCs [1].
Familiarize yourself with the specific requirements for LLCs, including business licenses, LLC tax rates, and any unique compliance obligations.
Conduct a name availability search in the new state to ensure the LLC's name is not already used. This step helps prevent potential conflicts and complications during the transfer process.
Evaluate the tax implications of the transfer to the new state. Be aware of the corporate income tax rates and other tax-related considerations that may affect the LLC's financial standing.
Assess any additional requirements specific to the new state. Different states may have unique LLC regulations, such as reporting obligations, annual fees, or LLC registered agent requirements.
“ It takes a courageous decision to have a successful business.”
- Jon Morgan, CEO & Editor-in-Chief of Venture Smarter
2. Inform the Current State and Dissolve the LLC in the Current State
Notify the current state's Secretary of State about moving the LLC to a new state. This formal notification ensures compliance with the current state's regulations.
Wolters Kluwer recommends filing the necessary documents for the limited liability company's withdrawal from the current state [2]. Completing this step is essential to terminate the LLC's presence in the current state legally.
Follow these steps to ensure a proper LLC dissolution:
- Settle outstanding obligations: Clear any pending debts, taxes, or liabilities before initiating the dissolution. This will help you avoid any potential legal issues down the road.
- File dissolution documents: Prepare and file the necessary paperwork with the state agency responsible for business filings. Depending on your state's requirements, this may include a Certificate of Dissolution or Articles of Dissolution.
- Notify business partners: Inform all relevant parties, such as clients, suppliers, and vendors, about the dissolution of your LLC.
3. Register Your Business In The New State
Prepare and file the Articles of Domestication or equivalent documents with the state agency responsible for LLC registrations in the new state.
This official state's LLC filing establishes the entity's presence in the new state.
Pay any required filing fee as per the new state requirements.
You will pay a filing fee to the Secretary of State or the corresponding state agency to file the articles of domestication.
As suggested by PrivateCounsel, you can determine the filing fee in advance by examining the applicable fee in filing the necessary documents [3].
Also, appoint a new registered agent with a physical address in the new state. The registered agent will act as the LLC's official point of contact for legal matters in the new state.
Submit additional required paperwork to the new state authorities to ensure compliance with all necessary regulations.
4. Transfer Assets and Contracts
Transfer business assets and LLC bank accounts to the new state. Update financial institutions and relevant parties about the LLC's move to facilitate a seamless transition.
Review and amend existing contracts to accommodate the transfer to the new state. Ensure that previous business relationships remain intact and updated to reflect the LLC's new location.
Update the limited liability company address with vendors, clients, and service providers to ensure continued communication and efficient business operations.
5. Notify Customers, Employees, and Partners
Inform customers and clients about the transfer and provide relevant details to maintain transparency and continuity in business relationships.
Communicate the change to employees and ensure a smooth transition to the new state. Use the same employer identification number obtained from the previous state unless stated otherwise.
Address any concerns or queries to maintain a motivated and dedicated workforce.
Notify business partners and affiliates about the LLC's move to the new state, ensuring that collaboration and cooperation continue seamlessly.
6. Finalize the Transfer
Obtain a Certificate of Good Standing or Tax Clearance from the current state, confirming that all obligations have been fulfilled.
Complete any additional requirements, such as Tax ID number, to finalize the LLC transfer to the new state, ensuring compliance with all relevant regulations.
Review the LLC's operating agreement and make any necessary changes to reflect the new state's regulations and business environment.
During the transfer process, remember that setting up new business accounts, such as bank accounts, in the new state is essential for smooth financial operations.
Why Would You Relocate Your LLC to a New State?
You would relocate your LLC to a new state for various reasons, such as:
- Seeking more favorable tax regulations
- Lowering business cost
- Accessing a larger market or customer base
- Benefiting from a business-friendly environment
- Taking advantage of specific industry incentives
I inform potential business owners that the top 5 states to form an LLC include Wyoming, Nevada, Alaska, South Dakota, and Delaware.
Since Delaware is among the top 5 states to form an LLC, the Division of Corporations published that the state is home to an average of 66.8% of Fortune 500 companies.
Alternative LLC Transfer Option: File as a Foreign LLC
Many business owners relocating their companies may want to retain the limited liability company they originally formed.
This is an option, but it's essential to understand that you will only keep your original company name if you follow additional steps.
However, you must file for a Certificate of Authority (Foreign qualification) with the state of residence for your new business.
Your new LLC must file as a foreign business entity in your old state. You must also make sure with the state agency that all your business filings fit the criteria of foreign qualifications.
Doing this will allow you to maintain the same name and permanent business address.
The foreign LLC can also use your original tax information when filing all state, federal, and other required returns.
You may also have to provide information on where the original business was formed and why it moved.
If you were required to pay franchise fees within that state, these would also be transferred.
You must notify creditors or local agencies that have registered your name with a trademark.
Read our article for more information on transferring ownership of an LLC.
FAQs
How Much Does It Cost to Move My LLC to Another State?
It costs a variable amount to move your LLC to another state. The cost is determined by factors such as the state you're moving to, the complexity of the LLC's structure, the required legal documentation, and potential professional fees. Generally, the costs may range from \$50 to \$800.
What Type of Law Applies to My LLC After I Relocate to a New State?
The type of laws that apply to your LLC after relocating to a new state will be subject to the state's regulatory framework in which you re-domesticate. This includes taxation, compliance requirements, and corporate governance standards.
Can I Maintain the Same Business Name When Transferring My LLC to Another State?
You can maintain the same business name when transferring your LLC to another state, provided that the name is available and not already registered in the new state. Conduct a thorough name availability search in the state's business registration database to verify its legitimacy and avoid conflicts and legal issues.
References:
- https://www.privatecounsel.com/llc-domestication-states/
- https://www.wolterskluwer.com/en/expert-insights/llc-inc-voluntary-withdrawal-compliance-chart
- https://www.privatecounsel.com/llc-domestication-cost/
