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Business relocation is a complex decision. There are a lot of things that a business owner needs to factor while planning to relocate. From the cost of the relocation to the legal entity changes, the relocation requirements of the employees and the effect of the big move on yourself, are some of the common concerns of every business move. When you are busy with all these factors of moving, there is more that you need to be considered about, especially when it is an interstate move.

Interstate Business Relocation

The experts at Moving Feedback, a renowned moving service platform that offers moving guidance and advice quote that business moving interstate is really common nowadays. It could be the tax advantage, easy availability of labor, better opportunity and lack of competition or any other reason that a business decided to relocate to a different state. Interstate business relocation is more complex that the counterpart and there are unusual changes the businesses have to prepare for.

The legal status of a business is the first thing to get affected when a business moves to another state. Most of the businesses have registered themselves with more than one state. Moreover, depending upon the type of business, there are legal formalities and regulations that a business has too rely on:

Sole proprietorship:

If you run a sole proprietorship, there are minimal formalities to undertake. As a sole proprietorship is considered as the same entity as its owner legally, the taxes calculated for the business are filed under the personal income tax return of the business owner. The business tax amount is calculated based on the Schedule C. When a sole proprietor decides to move, the business owner has the obligation to inform the IRS about the change of address.

Domestic and Foreign LLCs:

It is a legal obligation to get a Domestic LLC registered in the state where it operates from primarily. Foreign LLC, on the other hand, is registered in more than one state. Whether you are a domestic LLC or a Foreign LLC, depending upon the state you are moving to, you will have to adhere to different rules and regulations.

You can keep the LLC registered to its existing state and establish a foreign LLC in the new state you have moved to.

  • Liquidate the LLC in the existing state and after moving to the new state, establish a new one.
  • Create a new LLC in the new state and once established, merge the existing LLC into it.
  • If you are a part of a multi-member LLC, you can establish a new LLC in the new state and ask the members to transfer their percentage of ownership from the old company to the one freshly established.

Partnerships and Corporations

Moving partnerships and corporations to another state is also a complicated process. Partnerships is like LLC with a lot of members who have a claim on the ownership. It is recommended to request the partners to transfer their ownership to the new company once you have established it in the new state.

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What type of document changes should you expect while changing a business location to a new state?

Because the requirement of documents is different in every state, there will be a lot of changes that a company will have to consider to ensure its legal documents are in compliance with the rules and regulations of the new state. Primarily, you will have to change two types of documents:

1- Formation documents

If you want to register with a state, you will have to file the formation documents. The requirements for Articles of Incorporation (for corporations), partnership registration documents, or Articles of Organization (for LLCs) is different for every state and must be followed accordingly.

2- Governing Documents

The governing documents of the company will also need to be changed. In case of a corporation it will be the bylaws, the operating agreement in case of an LLC and partnership agreement for a partnership. You will have to get these documents rewritten in accordance with the requirement of the new state.

Business location addition:

As you decide to move your company to another state, you will have to consider whether or not your company will continue to do business in the previous state. This implies that you will have to have an operating location in that state, tax presence in the state or a tax nexus in the state. This is the apt example where you can continue as a domestic LLC in the former state while register a foreign LLC in the new state.

Business moves are complicated, especially when you are moving from one state to another. Hope the above mentioned information helps you in legally moving to another state. Business moves have become very popular and there are different reasons why businesses are choosing to relocate. If you have a valid reason, find the best location for your business and start the moving process.

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