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Moving States with Your LLC: Key Considerations and Options for Personal Relocations
Moving States with Your LLC: Key Considerations and Options for Personal Relocations

Options and Considerations for Moving States with Your Business. Plan ahead for a seamless transition.

Updated over a week ago

Moving to a new state is an exciting adventure, but it comes with a unique set of challenges when you own a Limited Liability Company (“LLC”). If you're planning a personal move and have an LLC, it's essential to understand the legal and financial implications of the relocation. To make sure we have enough time to help you plan, please let us know about any moves to a new state at least two months prior to your relocation. Let's examine the options available for managing your LLC during your move and the process here at Collective.

Option 1: Foreign Registration

Foreign registration is the process of registering your business in one state to do business in another state. Utilizing a foreign registration, you can keep your existing LLC registered in your current state while also registering it as a “foreign” LLC in your new state. Please note that although the term includes the word "foreign," it does not have anything to do with conducting business in other countries.

With a foreign registration, your LLC remains in existence, maintaining its history and records. In addition, you don't need to create a new operating agreement, obtain a new EIN or make a new S election, making the process of getting up and running in your new state relatively straightforward.

You will, however, be required to pay fees, file tax returns, and maintain compliance with regulations in both states.

Collective does not support setting up foreign registrations today, but we have a partner that we can connect you to and help coordinate the details. Click here to learn more about what this process looks like as a Collective member.

Option 2: Redomestication

Redomestication is the process by which an LLC changes its domestic jurisdiction to another jurisdiction, essentially moving the business from the old state to a new state. Please note that this may not be an option for you, as some states permit this activity while others do not. You’ll need to do some research to determine if a redomestication is possible given your old state and new state.

Using a redomestication, your LLC retains its history and S election, records and EIN while only needing to comply with the laws and regulations of the new state. The drawback? The process can be complex and may require legal assistance, and not all states allow redomestication, so it may not be an option depending on the states involved as we mentioned above.

Collective does not support setting up redomestications today, but we have a partner that we can connect you to and help coordinate the details. Click here to learn more about what this process looks like as a Collective member.

Option 3: Dissolution and Reformation

If your business no longer requires an entity in the old state, dissolving (or closing) the original entity and simply reforming an LLC in the new state is an option. This method is similar to starting from scratch with a brand new entity. Be careful though: if you’re moving out of state but still generate income from the original state, you may still need the entity in your new state.

If you choose a dissolution and reformation, you'll only need to comply with the laws and regulations of the new state. The drawbacks? Your LLC loses its history and records, which may impact relationships with clients, vendors, or financial institutions. Fortunately, you are able to keep your EIN and federal S Election. If you select this option, please also keep in mind you’ll need to file two business tax returns (one for the old business and one for the new business we set up for you). If Collective set up your original business, we can help prepare your final year return.

Click here to learn more about what this process looks like as a Collective member.


Once I Pick an Option, What do I do Next?

The path forward varies depending on the option you’ve selected. Let’s go through the process for each.

Foreign Registration

  1. You: Email [email protected] to let us know about your upcoming move and to which state, the date you plan on moving and indicate that you'd like to pursue a foreign registration.

  2. Collective: We’ll ask you to confirm a few details and then introduce you to our foreign registrations partner, Registered Agent Solutions Inc (“RASI) who will prepare a quote to get your entity set up in your new state.

  3. You: RASI will send the quote over for your review and approval.

  4. RASI: Once approved, RASI will begin to prep the forms for filing and will send them for your review and signature (if necessary). They will then file the forms with the relevant state body. Once the state processes the filings, RASI will send you confirmation that your LLC is now foreign registered in the new state. Please note the timeline for this process can vary widely by state. In addition, you will need a registered agent in your new state. RASI can act as your registered agent in your new state, and we’ll pass through a fee of $58/year for this.

  5. You: Complete the IRS change of business address form, sign the form and send it directly to the IRS at the address below:
    Internal Revenue Service
    Ogden, UT 84201-0023

  6. Collective: Once your entity is set up, we’ll begin the process of registering you as an employer in the new state so that we can obtain the state tax IDs which will allow you to run payroll in your new state. Once we have obtained your new tax IDs, we’ll update them in Gusto. We’ll also begin the process of closing the payroll tax accounts in the state you moved from.

  7. You: Once you’re all set up, you should inform any banks, clients, vendors and government agencies of your LLC's relocation and any changes to your contact information. You’ll also want to update your business address on your website, marketing materials and other public-facing information.

Redomestication

  1. You: Email [email protected] to let us know about your upcoming move and to which state, the date you plan on moving and indicate that you'd like to pursue redomesticating your LLC, if possible.

  2. Collective: We’ll ask you to confirm a few details and then introduce you to our foreign registrations partner, Registered Agent Solutions Inc (“RASI) who will do some research to determine if a redomestication between your old state and new state are possible. If it is possible, RASI will prepare a quote. Often times, prep times on redomestication quotes can take a week or two due to the complexity of the process.

  3. You: RASI will send the quote over for your review and approval.

  4. RASI: Once approved, RASI will begin to prep the forms for filing and will send them for your review and signature (if necessary). They will then file the forms with the relevant state bodies. Once the states process the filings, RASI will send you confirmation that your LLC is now registered in your new state and is no longer active in your old state. Please note the timeline for this process can vary widely by state.

  5. You: Complete the IRS change of business address form, sign the form and send it directly to the IRS at the address below:
    Internal Revenue Service
    Ogden, UT 84201-0023

  6. Collective: Once your entity is set up, we’ll begin the process of registering you as an employer in the new state so that we can obtain the state tax IDs which will allow you to run payroll in your new state. Once we have obtained your new tax IDs, we’ll update them in Gusto. We’ll also begin the process of closing the payroll tax accounts in the state you moved from.

  7. You: Once you’re all set up, you should inform any banks, clients, vendors and government agencies of your LLC's relocation and any changes to your contact information. You’ll also want to update your business address on your website, marketing materials and other public-facing information.

Dissolution and Reformation

  1. You: Email [email protected] to let us know about your upcoming move and to which state, the date you plan on moving and indicate that you'd like to dissolve (close) your current LLC and re-form your LLC in your new state.

  2. Collective: We’ll ask you to confirm a few details and then introduce you to our partner, Registered Agent Solutions Inc (“RASI") who will be handling the dissolution of your LLC in the old state. RASI will prepare a quote for the dissolution. At the same time, Collective will begin the process of filing your new formation documents to create the LLC in your new state.

  3. You: RASI will send the quote over for your review and approval.

  4. RASI: Once approved, RASI will begin to prep the forms for filing and will send them for your review and signature (if necessary). They will then file the forms with the relevant state body. Once the state processes the filing, RASI will send you confirmation that your LLC is dissolved.

  5. You: Complete the IRS change of business address form, sign the form and send it directly to the IRS at the address below:
    Internal Revenue Service
    Ogden, UT 84201-0023

  6. Collective: Once your entity is set up in the new state, we’ll begin the process of registering you as an employer in the new state so that we can obtain the state tax IDs which will allow you to run payroll in your new state. Once we have obtained your new tax IDs, we’ll update them in Gusto. We’ll also begin the process of closing the payroll tax accounts in the state you moved from.

  7. You: Once you’re all set up, you should inform any banks, clients, vendors and government agencies of your LLC's relocation and any changes to your contact information. You’ll also want to update your business address on your website, marketing materials and other public-facing information.

As you can see, relocating to a new state with your LLC can be a complex process, but understanding the options available and their implications can make the transition smoother. Whether you choose foreign registration, redomestication or dissolution and reformation, it's essential to plan ahead, keep us in the loop and ensure compliance with the new state's regulations. By taking the appropriate steps and selecting the right option for your situation, you can continue to grow and operate your business successfully in your new location. Remember to keep an open line of communication with us to help you navigate the process and coordinate the necessary details, ensuring a seamless transition for your LLC.

Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.

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