
LTD vs LLC: What Is the Difference?
Published on February 16, 2022
If you’re starting a company, you may have heard of various business structures you might choose, such as a limited liability company (LLC). You may also have…
Read Now
Updated on November 17, 2021
If you have a limited liability company (LLC), you might wish to transfer your LLC to a new state because:
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.
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:
If you will no longer be doing business in your home state, you have other options to transfer your LLC to another state.
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.
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:
Each state has its own domestication process, and the laws of both states must be followed. In general, domestication occurs as follows:
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.
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.
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.
Published on February 16, 2022
If you’re starting a company, you may have heard of various business structures you might choose, such as a limited liability company (LLC). You may also have…
Read Now
Published on February 16, 2022
If you’ve recently formed a limited liability company (LLC), you may have some tax questions. One of the most important is about when LLC taxes are due….
Read Now