As a homeowner, you may choose to move to another state for a different lifestyle or a larger home. As a business owner, you may make the decision to move your company out of state if your market has changed, a different location would be more tax-friendly, or there are fewer business competitors in a new market. You may also want to be closer to family or attract the best talent for your business.
In addition to packing up your office and changing your address, there are other essential steps you need to take for a successful move. The specific steps you need to take to relocate your business depend on how your business is structured. Learn what you need to do for a seamless transition in the sections below.
Sole Proprietorships
If you have a sole proprietorship, you aren’t required to register with the state, which makes a move to another state easy to complete without much paperwork. While you don’t need to register with your new state, you do need to cancel any business licenses or permits you hold with your current state if you plan to stop operations at that location.
Apply for new licensing and permitting requirements with your new state as soon as possible so you can start operating legally when you get there. Depending on your industry, you may need to do some research on these requirements. For example, you could be required to satisfy:
- General contractor license requirements.
- Electrical contractor license requirements.
- Plumbing license requirements.
Although you may not have needed to register your sole proprietorship as a business with your current state, your new state may have different regulations.
Check to make sure you don’t need to register your business and transfer your business name to your new state, especially if you have a “Doing Business As” (DBA) name. Let the IRS know you’ve moved to a new state and be prepared to pay taxes for both locations when it’s time to file.
Domestic and Foreign LLCs
LLCs are popular business types. In Delaware alone, 165,910 LLCs were registered with the state in 2019 while only 45,405 corporations were registered in the same time.
As an LLC, your business is registered with your current state. LLCs may be registered with multiple states if they do business in several locations. You may choose to cancel this registration, liquidate your original LLC, and re-register with your new state.
If you plan to continue doing business in your original location, keep your previous registration and register with your new state. In your new state, your LLC is considered a “foreign LLC” but you still have rights to conduct business once you’ve completed your registration.
You may also choose to register for a new LLC in your new state and merge your old business into it. If you have multiple members of the LLC, you could also register the new business with your new state and have all members transfer their ownership from the previous LLC to the new one.
If you choose to dissolve your old LLC, be prepared to pay any back taxes or other debts immediately. When dissolving an LLC, the requirements may vary by state. Research your state’s laws before you decide how you want to proceed.
Partnerships
As a partnership, you’re not required to register with the state unless you’re doing business under a different name than your own, which makes your move to another state relatively simple. However, with a partnership, there’s another party involved and all business owners must agree on the move and how to proceed.
Wrap up your pending business projects before you take the steps to relocate your business. Ensure you and your partner are on the same page and transfer your business’s name to the new state. Cancel any permits or licenses you have in the current state and apply for the documentation you need to start operating in your new state.
Analyze your new state’s requirements for doing business, which may vary by industry and could include getting bonded and insured. If so, consider applying for bond insurance before you move so you can start on projects as soon as you get settled in your new location. Keep in mind, you may need to provide a certificate of insurance for each new job you take on, depending on your industry and state regulations.
Corporations
Relocating a corporation to a new state can get complicated. First, ensure all stakeholders and owners agree on the move and the way it should be conducted. The regulations for moving a corporation may vary by state and could be different depending on the type of corporation the business is registered as, such as an S-corporation or C-corporation.
Similar to an LLC, you may choose to dissolve your current corporation and re-establish it in the new state or continue doing business in your current state and do business as a “foreign” corporation in your new state. No matter which strategy you choose, be prepared to file legal documents with your new state.
As a corporation, your new state may require you to file Articles of Incorporation, which provide general information on your business. New governing documents may also be required, which include bylaws, or the regulations your corporation plans to adhere to while in operation.
Moving Tips for All Business Types
No matter what type of business is moving to a new state, there are several steps you should complete to ensure your relocation is successful. When you move, be sure to:
- Consider whether you want to continue doing business in your original state.
- Inform your clients about this move and how it affects their service in the future.
- Check with your new Secretary of State’s office to ensure you’ve registered correctly.
- Research changes to your business expenses, such as taxes and insurance.
- Get involved in your new community and start advertising your business.
Before moving your business, it’s also important to research your business competition and the demand for your services or products in your new location. With enough research, you’ll be prepared for the changes your business is bound to experience when you relocate to a new state.
If you’ve decided relocation is best for your business, learning about the regulations in your new state is crucial to a smooth transition. Take the time to find out more about the documents, licenses, permits, insurance, and registration you’ll need to start doing business in your new state before making the move.