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Do You Plan To Move Your Business To A New State?

Moving your business to a new state may not be as complicated as you think.  But you will need to do your homework to ensure a smooth--and legal--move.

Owners move their companies out of state for a variety of reasons.  The change might be prompted by personal or health reasons, to get to a more favorable business climate, to operate in a state that has no state income tax, or because of some other motivation.

But whatever your reason for making a move, the first thing to do is to consult with your attorney, who can help you navigate the legal and regulatory waters of moving your business.  There are important questions to be answered.  The Small Business Administration (SBA) says the questions asked most frequently by business owners involve the impact that moving may have on taxes, registration, and incorporation. 

So let's consider the answers as they pertain to different types of businesses: 

Sole proprietorships and partnerships

These businesses are the easiest to move.  The first step is to register your business in the state to which you are moving, using the "Doing Business As" (DBA) registration process.  Then you need to discontinue your old business.  Depending on the legal requirements of your new state, you might register at the county clerk's office or with the state government. 

Limited liability companies (LLCs)

Moving an LLC to a new state involves several options:

  1. You could continue your LLC in your current state and then register as a foreign (out-of-state) LLC in your new state.
  2. You might dissolve your LLC in your current state and then establish a new LLC in the new state.  There aren't any tax consequences if you choose this option.
  3. You can register a new LLC in the new state. Each member also must transfer his or her membership interest, maintaining the same percentage of ownership as in the old LLC.
  4. A final option would be to register a new LLC in the new state and then merge your previous LLC into the new entity.  You can continue using your existing employer identification number (EIN) because the IRS considers your EIN as a continuation of the previous LLC.  If all LLC members still have a 50% interest in the capital and profits of the new LLC, you won't face any tax consequences.

Corporations (C or S)

Moving a corporation to a new state is much like the process for moving a LLC.  Your options are:

  1. You can continue your corporation in the old state and register as a foreign corporation in the new state. If you choose this option you will incur fees in both states.
  2. You can dissolve your corporation in the old state and establish a new corporation in the new state. However, heavy tax consequences could be associated with this choice and could affect employee benefits, such as retirement plans.
  3. You can register a new corporation in the new state and then merge your previous corporation into the new one.  This avoids the requirement to pay fees in two states and permits a tax-free reorganization.

Online businesses

Although an online business has no boundaries regarding where its owner can do business, if you move an online business to a new state you must comply with applicable laws in that state.  To take an online business operation to a new state, you must move your business entity, following one of the methods for moving sole proprietorships, partnerships, LLCs, or corporations.  If you have an e-commerce website, you also will need to apply for a sales tax permit in the new state. 

Once you've moved your business, you'll need to finish the job by applying for necessary licenses and permits (which vary by state), making sure you comply with the local zoning laws in your new location as well as dealing with the tax ramifications, meeting reporting requirements, and adhering to the requirements of your old state for dissolving a corporation.  Your attorney can help you make sure you don't miss anything. 

Finally, don't forget that you can deduct or capitalize your costs in moving your business.  That's the case regardless of whether you operate your company from home or a business location.



INDEX
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  • Now Is A Perfect Time To Open A New Business
  • Do You Know If Your Business Really Is Small?
  • 4 Estate Issues For Business Owners
  • Self-Employed? Map Out Tax Details
  • 10 Easy Steps To Take If Opening A New Business
  • To Buy Or Not To Buy: That Is The Business Franchise Question
  • Ever Considered Helping Your Adult Child Open A Business?
  • Do You Know What Kind Of Business Not To Open?
  • Do You Plan To Move Your Business To A New State?
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  • 4 Retirement Plan Options For Your Small Business
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  • 4 Steps To Creating A Dynamic Business Budget
  • Can An Underfunded Small Business Startup Be Successful?
  • What Happens If You Have Excess Capital Losses?
  • This Is Not Granddad's 'Defined Benefit Plan'
  • Despite Much Pessimism, Slow Growth Persists
  • How To Take Your Section 179 Deduction To The Max
  • Squeeze More Out Of Bonus Depreciation Deductions
  • A Common Error In Powers Of Attorney
  • For The Self-Employed: 4 Retirement Plan Choices
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  • How Economic Myths Distort Investment Outlook
  • Don't Forget About Roth 401(k)
  • REITs: A Great Diversification Investment
  • Shopping For A Bank Account That Pays The Highest Possible Rate Of Interest
  • The Twenty Top Tax Breaks In The New 2010 Tax Act
  • Investing Defensivley Does Not Mean Deserting Stocks
  • 401(k) Alternatives For Business Owners
  • Tax Court Okays Deducting Cost Of MBA
  • Employers Find Ways To Mitigate Liability On 401(k)s
  • Working Longer: What's A Post-Retirement Job Worth?
  • Slash Taxes By Swapping Like-Kind Assets
  • Transferring The Family Business To Your Heirs
  • Business Owners Get Big Tax Cuts In Recovery Act
  • Move Fast To Corral Emergency SBA Loans
  • Risk Management
  • Estate Taxes And The Obama Administration
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  • A Little Bond Logic Yields Insights
  • Avoiding The IRA Rollover Crackdown
  • Ruling Cites Business Owner Responsibility to 401 (k) Plans
  • Ruling Cites Business Owner Responsibility to 401(k) Plans
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  • Managing Cash Flow In Tight Times
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  • Avoid Being Accused Of Insider Trading
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  • Funding A Friend's Business Venture
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  • Regulatory Guidelines Update
  • Small Business And Work Opportunity Tax Act
  • The Oil Patch Profit Squeeze
  • Free Credit Reports Available Online
  • Understanding the Importance of a Fiduciary Standard
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  • Timber As A Liquid Investment
  • Timber Facts
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  • Bank Loan Funds - A Primer
  • Ethanol: Salvation or Panacea?
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  • A Primer On Managed Futures
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  • Know The Score
  • REITS: A Very Good Portfolio Diversifier, But Should You Invest In Them?
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  • Identity Theft : Correct Those Credit Reporting Errors
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  • Q & A With Robert Arnott
  • Identity Theft : Applying For Credit? Better Check Your Credit Report First
  • Identity Theft: Everyday Prevention
  • Identity Theft : Help Is On Its Way
  • Identity Theft: Tips To Protect Yourself
  • Identity Theft : Don't Fall For That E-Mail!
  • Identity Theft : One More Reason To Protect Your Credit
  • Identity Theft: A Note About Social Security Numbers
  • What Do Rising Interest Rates Mean For Money Market Yields?
  • Exit Gracefully: How Business Owners Should Plan For A Comfortable Retirement
  • Section 529 Plans Are Popular But Not The Only Way To Go
  • The Importance Of Commodities In A Portfolio
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  • IRS Refuses Change Of Section 179 Election To Expense Depreciable Property
  • Small Businesses Need To Be Aggressive On Costs
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  • Home Office Deductions: Hoops To Jump Through
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  • 4 Steps To A More Secure Investment Portfolio For Your Retirement
  • Traditional Investing May Decrease Your Retirement Lifestyle
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  • Businesses Receive Temporary Depreciation Bonus
  • Understanding Deflation
  • Is Your 401(k) Plan A Failure?
  • Succession Planning: Developing A Plan For Your Business
  • The ERISA Retirement Plan Law Spells Out Fiduciary Issues
  • Evaluating The Quality Of A Company's Earnings
  • Investing In Times Of Uncertainty And Risk: The Importance Of Diversification
  • Tax Issues To Consider When Buying A Long-Term Care Policy
  • Yesterday's Great Companies
  • Businesses Should Be Aware Of States' Use Taxes
  • Expanded Retirement Plan Contribution Limits Create New Opportunities For Business Owners
  • Succession Planning: Developing A Plan For Your Business



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