How to Transfer an LLC to Another State

If you have a limited liability company (LLC), you might wish to transfer your LLC to a new state because:

• You’re moving and want to take your business with you
• You’re no longer doing business in your home state
• You’re unhappy with the laws and requirements of your home state

There are several ways to handle this situation, and transferring your LLC can be complicated. This article breaks down the three ways to shift your LLC operations to another state.

Register a Foreign LLC

If you plan to do business in a new state but continue to do business in your home state, registering a foreign LLC is likely the best option for you. A foreign LLC is simply an LLC doing business in a state other than the one in which it was initially registered. For instance, if your LLC is registered in Alabama but you also do business in Georgia, you need to register as a foreign LLC in Georgia.

When you register a foreign LLC, you must comply with the laws of all states in which you register. For example, if states have different annual filing requirements and fees, you must follow all of them. This can get expensive and complicated, particularly if you are doing business in multiple states, but it is the only way for an LLC to do business in multiple states.

Here are the steps to register a foreign LLC:

1. Register your LLC in your home state if you have not done so already.
2. Choose a registered agent in the state where you will be doing business. Each LLC that you register needs a registered agent in that state if the state requires one. A registered agent is a person or business authorized to accept legal, tax, and financial documents on behalf of your business. You can check your state’s website to see if you are required to have a registered agent for your LLC. You may want to choose a national service so that as you expand you have the flexibility to form foreign LLCs in other states without having to locate new registered agents in each state.
3. Check with the secretary of state to learn how to register your foreign LLC and see what name requirements they have. Choose a name that meets those requirements.
4. Check with the secretary of state to see what they require to form your foreign LLC. You will probably need:

• LLC’s name and name you are doing business as in your home state
• State where LLC was originally registered and date of formation
• Street address of the original LLC
• Street address of the LLC in the state where you do foreign LLC registration
• Name and personal info of your registered agent
• Original LLC registration documents from your home state

5. Fill out the required paperwork for that state including your Articles of Organization, an Operating Agreement if required, and any other documents required by the new state.
6. Pay associated fees for the foreign LLC registration, which vary by state.
7. Check the new state’s requirements for annual filings, annual meetings, and other ongoing requirements.

If you will no longer be doing business in your home state, you have other options to transfer your LLC to another state.

Dissolve the Existing LLC

If you are transferring everything to the new state and completely terminating business in your previous state of residence, it might be best to dissolve your existing LLC and form a new LLC in your new state. Processes to dissolve LLCs vary by state. If you are a single member LLC with no debts, it will be fairly simple. Either your Articles of Organization or your operating agreement should contain rules for how your LLC can be dissolved.

Generally, dissolution requires a vote of the members. If you are the only member, it’s not a problem. But with multiple members you may need the approval of all of them. Whether yours is a single-member or multi-member LLC, you’ll need to wrap up all the business of the LLC to dissolve it, which means paying off all debts and distributing all assets.

If the value of cash or securities distributed to members is greater than their original contribution, the gains will be taxable. Appreciation on real estate or personal property assets are not taxable.

Once the LLC is dissolved according to the laws of your state, you can form a new LLC in your new state.

Domestication of the LLC

Another option is to domesticate your LLC. Domestication is the process by which an LLC changes the state in which it is registered. Once domestication is complete, the laws of the original state no longer apply, and the new state laws apply instead. This provides several benefits:

• Dissolution is not necessary
• There is no interruption in business
• You can continue to use the same bank accounts
• You can continue to use the same EIN

Each state has its own domestication process, and the laws of both states must be followed. In general, domestication occurs as follows:

1. Draft a plan of conversion. This should be done by the LLCs attorney, and basically outlines the steps of domestication.
2. Approve the plan of conversion. Members of the LLC must approve the plan.
3. Complete documents required by each state.
4. File the conversion forms and pay required fees.
5. Complete any documents required by the new state to fully form the new domesticated LLC.

Domestication can be complicated because the laws between states may conflict. There also may be tax considerations at the state level such as unpaid franchise taxes that become due.

Shifting Your LLC to a New State

As this article has shown, you cannot simply transfer your LLC to a new state. To move your LLC to a different state, you can either register in the new state as a foreign LLC, dissolve the LLC and form a new one or domesticate your LLC.

If you want to move your LLC to a new state because you don’t like the laws of your current state, yet you plan to continue to do business in your home state, choosing any of the options is probably not going to help you. You would still need to register as a foreign LLC in your home state, and would thus still be subject to the laws and taxes of both states.

Generally, the only reason to wholly move your LLC to a new state is if you are moving your business to the new state and abandoning ending any business dealings in your original state.

Conclusion

In order for your LLC to do business in a new state, you need to decide which of the available options is right for you. The methods are not always easy, so it is highly recommended that you obtain the advice of an attorney who can also help you through the process. They can help you make the right decision and stay in compliance with the laws of both states and take the work and the weight off your shoulders.