Can I Form an LLC in Another State
It is possible to move an LLC to another state. The company will be considered a “foreign LLC” in the new state until the transfer has been completed.3 min read
Can I form an LLC in another state? Yes, it is possible to move a Limited Liability Company (LLC) to another state. The company will be considered a “foreign LLC” in the new state until the transfer has been completed. To simplify the process, a business must register the new LLC, file the transfer paperwork, and dissolve the old LLC in order to complete the transfer process.
Guide to Moving Your LLC to Another State
Perhaps you're thinking about moving your LLC in order to decrease operating costs or to be closer to family and friends. Whatever the reason, the process will vary by state and business. Remember that it is most important to establish your end goals and research the laws and regulations of the state that you plan on moving to.
It's highly recommended to consult an attorney in the new state to assist in the process and ensure that the transition meets all of the new state requirements. Typically, when moving an LLC to another state there are three options:
- Keep the old LLC and register in the new state as a temporary move
- Transfer the LLC to the new state as a permanent move
- Dissolve the old LLC and form a new one in the new state
Transfer an LLC From One State to Another
Domestication is the process of transferring an LLC to another state. It's the easiest way to permanently move an LLC to another state. Remember, not all states allow domestication to occur. Be sure to research whether it's allowed in the proposed state before starting the process. A domesticated LLC is formed by:
- Obtaining the certificate of good standing from the state in which you were originally formed
- Filing the certificate of good standing and the articles of domestication with the new state
- Dissolving the old LLC
There are many benefits to domesticating, such as not needing to file annual reports and pay taxes in two different states You will also be able to keep the same:
- Tax ID number
- Bank accounts
- Credit rating
- Existing business relationships
Keep an Old LLC and Register in a New State
In order to legally qualify to do business in another state, a business needs to register as a foreign LLC. Keeping the old LLC incorporated and registering in a new state is probably the most expensive option of the three. This is because you'll need to pay annual and registered agent fees in both states. However, if this is a short-term change it may be the best option. There are many benefits to this option, including maintaining your existing:
- Employer identification number
- Bank accounts
- Permanent business address
Before deciding on this option, verify with the state whether your company meets the criteria for a foreign qualification.
Dissolve an Old LLC and Create a New One
If your goal is to merge into a new LLC or to form a new LLC, you should begin the process of dissolving the old LLC. There are three ways to accomplish this:
- Merge both of the LLCs
- Dissolve the old LLC
- Have the members of the old LLC devote their membership interests into the new LLC
This is the most complicated option of the three. It's highly recommended to seek the assistance of an attorney to offer support in the transition. There may be some inconveniences in this option, including:
- Needing to get a new tax ID number
- Establishing new bank accounts
- Losing your current credit rating
Why Would I Want to Form an LLC in Another State?
There are a number of reasons to form an LLC in another state, including:
- Expensive filing fees: Filing fees can vary dramatically by state.
- Expensive annual fees: Annual fees can vary dramatically by state.
- Inadequate legal processes: Many states have dedicated courts focusing on corporate law that help to expedite cases.
- Planning a move: Business owners that are planning on moving to another state in the near future will most likely need to consider incorporating in the new state.
Remember, no matter the reason, LLC members always have the option to form an LLC in another state.
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