What To Do With Your Business When Moving States
You have several options when it comes to maintaining your limited liability company (LLC) or corporation after you move to another state. Choosing the right route for your business depends on whether you plan to take your business with you, keep it in the state it was formed, or expand operations. (Unfortunately, it also depends on where you’re moving.) Whatever the case, moving doesn’t necessarily mean you have to start from scratch. Here are some options:
Foreign qualification: operate in multiple states
If you plan to operate your business in a new state, you’ll need to register as a foreign LLC or foreign corporation. This is a process known as Foreign Qualification. You may want to register as a foreign business entity if, for example, you run a successful coffee shop in Nashville and plan to keep that business up-and-running while you open another branch near your new home in Detroit.
The registration process varies from state to state, but it typically involves filling out a form and paying a fee. You will also need to have a registered agent each state you’re registered to do business. (Which, in the case of this coffee shop, would mean Tennessee and Michigan.)
Domestication: move your business intact
Domestication is simply the process of moving an existing business to a new state. Domestication (also known as “change of domicile”) allows your business to retain its original date of incorporation, its existing federal tax identification number, bank accounts, licenses, and lines of credit. So, if you run an e-commerce business out of your home, a simple way to keep your business intact after a move is to follow the domestication process in your new state.
The problem is that not all states recognize domestication. (And some, like California, recognize domestication with strict limitations.) If you move around a lot and your business isn’t tied to any one particular geographic location, you might consider domesticating in a state like Wyoming, where tax laws are lenient and business fees are low. Otherwise, you might not be able to domesticate your business.
For more about Wyoming, check out Northwest’s page: How to Move Your LLC to Wyoming.
Dissolve your old business and start anew
This is a cut-and-dry process, but it involves a lot of paperwork (and expense). Fully Dissolving an LLC or Corporation requires settling debts and liabilities, as well as paying taxes and other liquidation expenses. That said, if you want to start fresh with a different business model or new members, you may want to dissolve your old business and start from scratch.
Merge your old business with your new one
Merging companies still requires you to start a new LLC or corporation in your new state. But—unlike the process of dissolving your company—you’ll be able to maintain your old company’s assets, properties and liabilities.
