How To Move Your LLC To Another State

Introduction.

If you’re running a business with an LLC (Limited Liability Company), you might be in a situation where moving your business to another state makes sense. Maybe you’ve found a better market, lower taxes, or just want a fresh start in a new location.

Whatever the reason, moving your LLC to another state isn’t as complicated as it might seem. It’s a pretty common decision for many small business owners.

If you’ve been thinking about this but aren’t sure where to start, this guide will help you understand what’s involved in the process.

Moving your LLC can seem daunting at first, especially if you’re unsure about the legal or logistical details. But with the right information, you can handle it smoothly. Here’s what I’ll walk you through in this post:

The Why: Why would you want to move your LLC?
The How: What are your options for moving an LLC to another state?
The Process: Step-by-step instructions on how to make it happen.
The Costs and Timeline: What should you expect?
Common Mistakes: What to avoid during the process.
FAQs: Some of the most common questions about moving an LLC.

Let’s break it down.

Why Would You Want to Move Your LLC?

First, let’s talk about why you might consider relocating your LLC. There are several reasons a business owner might want to change their LLC’s state of registration, including:

Better Business Environment: Certain states offer benefits like lower taxes, less paperwork, or more business-friendly regulations. States like Delaware, Nevada, and Wyoming, for example, are known for being particularly appealing to businesses due to their low fees and minimal reporting requirements.
Tax Savings: Taxes can be a huge factor in deciding where to run your business. Some states have no state income tax (like Florida and Texas), while others offer lower corporate tax rates or fewer franchise taxes.
Proximity to Customers or Suppliers: You might want to move closer to your target market or suppliers. Being located in a state that’s closer to the people you serve can improve business efficiency.
Simpler Reporting Requirements: Some states are known for having less paperwork, making it easier to maintain your LLC. If you’re tired of dealing with endless forms or complex state regulations, relocating to a friendlier state could be a good move.
Personal Preferences: Sometimes, the decision is purely personal. Maybe you’ve decided to live somewhere else, or your family situation has changed, and you want your business to follow suit.

How Do I Move an LLC to Another State?

There are a couple of ways to move your LLC to a new state, but the right option depends on what’s easiest for you and what makes the most sense for your business. Let’s break down the main methods:

1. Dissolve Your LLC and Re-establish It in Another State

This involves formally closing your LLC in your original state and forming a new LLC in your desired state.

You’ll need to follow all the rules for dissolving an LLC in your original state, and then go through the process of forming a new LLC in the new state, which includes filing Articles of Organization, getting an EIN, and possibly a new operating agreement.

Pros:

Simple process.
Cleans up your business records by formally ending the old LLC and starting fresh.

Cons:

You’ll lose the history of your original LLC.
You might face certain penalties or fees for dissolving the LLC, depending on the state.

2. Register as a Foreign LLC in the New State

This option allows you to keep your original LLC intact while also registering your business in the new state as a “foreign” LLC.

A foreign LLC is just a term for an LLC that is doing business in a state other than the one it was formed in. This lets you keep your original LLC and continue to operate in both states.

Pros:

Keeps your original LLC intact with its formation date and history.
It’s generally a less complicated process than dissolving and starting fresh.

Cons:

You’ll have to maintain two separate sets of business filings, one in your original state and one in the new state.
You might have to pay fees and taxes in both states.

3. Statutory Conversion (If Available)

Some states allow you to convert your LLC from one state to another without dissolving the original LLC.

This process, known as statutory conversion, is a smoother and simpler option if the state you’re moving to allows it.

Pros:

Easy process that doesn’t require dissolution or creating a new LLC.
You retain your LLC’s formation date and legal history.

Cons:

Not all states offer this option, so check if it’s available in your current and future state.

The Process: Step-by-Step

Now that you understand your options, here’s a step-by-step guide to moving your LLC.

Decide on the New State: Research the state you want to move to. Consider taxes, business regulations, and the overall business environment. It’s also important to check if the state allows statutory conversion (if you prefer that option).
Check Your LLC’s Operating Agreement: Review your LLC’s operating agreement to make sure there aren’t any restrictions on relocating. Some LLCs might have rules that need to be amended if you decide to move the business.
Choose the Right Method: Based on your goals and the options above, decide whether to dissolve and re-establish your LLC, register as a foreign LLC, or convert your LLC to a new state.
File the Necessary Paperwork: Each method involves some paperwork, such as filing Articles of Dissolution, Articles of Organization, or a Statement of Foreign Qualification. Be sure to also obtain a new EIN if necessary, and make sure your operating agreement is updated.
Notify the IRS: If your LLC has been assigned an EIN by the IRS, you may need to notify them of the change of address or new state of registration.
Update Your Business Licenses and Permits: Any business licenses or permits you hold in the original state will need to be updated or re-applied for in the new state.
Keep Track of Ongoing Requirements: Some states have annual reports, franchise taxes, and other requirements. Make sure you stay on top of these requirements in your new state.

Costs and Timeline

The costs and timeline for moving your LLC can vary based on the method you choose and the states involved. Generally, here’s what you can expect:

Filing Fees: The cost to file new formation documents or foreign qualification paperwork can range from $50 to $500, depending on the state.
Ongoing Fees: States charge annual fees for LLCs, which can range from $50 to $800 annually.
Taxes: Be prepared for potential tax liabilities in both your original state and the new state, especially if you are registering as a foreign LLC.

The timeline for moving your LLC will vary, but it can take anywhere from a few weeks to a couple of months to complete the process, depending on state processing times and whether you’re dissolving and re-registering or using statutory conversion.

Common Mistakes to Avoid

When moving your LLC to another state, avoid these common mistakes:

Not Researching the New State: Take the time to understand the new state’s business laws, taxes, and regulations before making the move.
Forgetting to Update Your EIN: If you dissolve your LLC, you may need a new EIN. Don’t forget to update it with the IRS.
Neglecting Ongoing Filings: If you continue to do business in the original state, you might still need to file certain reports or pay taxes there. Make sure you’re not neglecting this part of the process.

FAQs

Can I move my LLC to another state without dissolving it?

Yes, you can register your LLC as a foreign LLC in the new state, allowing you to keep your original LLC intact while also operating in the new state.

How long does it take to move my LLC to another state?

The process typically takes a few weeks to a couple of months, depending on the method you choose and the processing times in both states.

Do I need a new EIN when moving my LLC?

If you dissolve your LLC and form a new one in the new state, you’ll need a new EIN. But if you’re registering as a foreign LLC or using statutory conversion, your original EIN will usually remain valid.

Conclusion

Moving your LLC to another state isn’t a decision to be taken lightly, but it’s a process that can be done smoothly with the right preparation. Whether you’re moving for tax reasons, a better business environment, or personal preferences, you have several options available to make the switch.

Have you considered relocating your LLC to another state? What’s holding you back?