Merging Your LLC Into a New State Entity

A merger is one way to move your business to a new state while keeping its history intact. You form an LLC in the new state, then merge the old LLC into it. It's a useful path when redomestication isn't available and continuity of contracts and records matters to you.

It's also the most legally involved of the options short of starting over, so it helps to understand what you're taking on before you begin.

This article applies to both LLC tier and S Corp tier members. If you have an S Corp election, read "What to evaluate before you commit" closely, since a merger can affect it.

What a merger is

A merger consolidates two LLCs into one. In a relocation, that means forming a new LLC in your destination state and merging your existing LLC into it, with the new entity surviving.

This is a statutory transaction, which means it has to satisfy the merger provisions in both states' LLC laws. In most cases the effect is that by operation of law, the non-surviving LLC's assets, property, and liabilities become those of the surviving LLC. In most states that means there's no need to dissolve the old LLC separately and no need to write contracts transferring assets from one entity to the other, because both happen as part of the merger itself.

Why members choose it

A merger is worth considering when redomestication or foreign registration aren't viable for your business. It fits members who plan to stop operating in the old state entirely. After the merger, you pursue clients and deliver services in your new state, and you pay fees, file state returns, and maintain your standing there rather than in both states.

The advantage over dissolving and starting fresh is continuity. A merger can preserve contracts, financial history, and business records. The tradeoff is complexity and time.

What to evaluate before you commit

Federal and state requirements need to be reviewed in both jurisdictions, the state you're merging out of and the surviving state, because a merger may affect existing federal elections and your ongoing obligations. Whether your EIN and S Corp election carry over depends on how the merger is structured and on IRS treatment, and retaining them involves additional steps.

We strongly recommend consulting an outside legal or tax advisor who specializes in multi-state requirements before proceeding with a merger. This is the option where getting advice ahead of the filing pays for itself.

Steps in a merger filing

Requirements differ by state, so always check the LLC laws in both. The process generally involves three steps:

1. Draft a merger plan. This document lays out the terms of the merger and how assets and liabilities transfer, following each state's statute. Merger plans get complex, and this is work you'll likely want a business attorney to handle.
2. Get owner approval. Follow the approval rules set out in your operating agreement.
3. File the articles of merger in both states. Each state may have additional requirements and its own filing fees.

Once the merger is effective, the old LLC ceases to exist and its remaining assets belong to the new LLC, which takes over all business operations. In most states you won't need to formally dissolve the old entity separately, because it becomes part of the surviving LLC. Confirm the requirement in both states before you file.

Getting started

Because merger requirements vary significantly by state, Collective doesn't handle this filing in-house. We work with our partner agency, Registered Agent Solutions, Inc. (RASI), who will prepare a quote to handle the merger.

It's worth being precise about what RASI does and doesn't do. RASI assists with preparing and filing the forms at the Secretary of State level. They do not evaluate federal requirements and can't provide advisory services on your LLC's structure. That's the gap an outside legal or tax advisor fills.

Filing fees apply, and Collective passes those through to you after you approve the quote. A quote typically includes form preparation fees, state filing fees, a certificate of good standing from your original state, and late filing penalties where applicable.

To begin, message us through the Message Center in your Collective dashboard.

The merger process

1. Review and approve the quote. RASI sends a quote for your review. Nothing moves forward until you approve it.
2. Review and sign the forms. Once approved, RASI prepares the filing documents and sends them to you for review and signature where required.
3. RASI files with both states. They submit the documents to the relevant state agencies on your behalf.
4. Receive confirmation. When both states finish processing, RASI confirms that your LLC is registered in the new state and no longer active in the old one. Processing times vary widely by state.

By default, RASI acts as your registered agent in your new state, and the cost is included in your membership fee. If you'd prefer a different registered agent, let us know when you submit your initial request.

After your filings are processed

Work through the items below that apply to you.

Update your address with the IRS

1. Complete the IRS change of business address form (Form 8822-B) and sign it.
2. Mail it to the IRS service center for your new state. The correct address depends on where your business is now located, so check the current mailing addresses on IRS.gov before sending.

If you'd like Collective to prepare and submit this filing for you, let us know and we're happy to help.

Register as an employer in your new state

This step applies if you run payroll, which includes S Corp tier members paying themselves as an owner-employee and any member with employees.

1. Collective registers you as an employer in the new state and obtains the state tax IDs you need to run payroll there.
2. Your new tax IDs are added in Gusto.
3. We close the payroll tax accounts in the state you moved from.

Notify the people who need to know

1. Inform your banks, clients, vendors, and any relevant government agencies of your LLC's new state and any changes to your contact information.
2. Update your business address on your website, invoices, marketing materials, and anywhere else it appears publicly.

Next steps

To get started, head to the Message Center in your Collective dashboard and tell us the states involved and your expected timeline. For a comparison of all four relocation options, see Moving States with Your LLC: Your Four Options.

For situations outside standard guidance, our team of experts can help you navigate next steps. If you have questions specific to your business, reach out to your Collective Team.