A limited liability company can decide to operate in more than one state or to transfer totally to a new state. However, the LLC must officially register in the new state, according to the requirements of the state before going operational there. The procedure typically varies from state to state and the LLC would have to make its choice on how to go about the transfer process while putting its business goals into consideration. Now, let’s look at the different transfer options;
- Register your business as a foreign LLC in the new state
Moving your LLC to a new state makes it a foreign LLC in that state. Fortunately, it is allowed to do business in a new state even if you registered it in another state but you will have to officially register to do business as a foreign LLC by submitting a form to the state agency that is responsible for business filings. LLCs are therefore advised to register their business in a new state if they are moving temporarily, have plans to change states more than once or want to continue doing business in their old state.
Nevertheless, the LLC will have to maintain certain records including a permanent business address in the old state, Employer Identification Number (EIN) as well as its bank accounts. The LLC may also have to maintain a registered agent in both the old and the new state since they need to keep up with each state’s LLC filing and reporting requirements. In some states like California, you may have to pay an additional tax, notably franchise tax for registering your LLC to do business there.
- Domesticate your LLC
You can also opt to formally transfer your LLC to another state in a process known as domestication but that will depend on whether the state allows it or not. The process of creating a domesticated limited liability company entails obtaining a certificate of good standing from your old state and filling it along with other documents such as Articles of Domestication with either the secretary of state or the agency that is responsible for business filings in your new state. Domestication is indeed one of the easiest options for transferring an LLC to a new state because it allows the LLC to maintain things like bank accounts, tax ID numbers and credit rating.
- Dissolve the old LLC and form a new one
Another alternative is to simply dissolve the LLC and form a new one in the new state. There are primarily two ways to achieve this. You can either choose to merge the two businesses or liquidate the old LLC and let the member contribute their membership interests to the new company. This method of transfer can be complicated so it’s imperative to seek advice from an attorney before following this path. This process is further complicated because forming a new LLC in the new state means you will also have to go through the hassles of getting a new tax ID number and creating new business accounts. Besides, you may also lose the benefit of good credit that your business has built over the years.