It’s not uncommon for people to move from state to another. If you’re a business owner with an LLC, you have to deal with the question of if and how you should move your business to your new state. There are four main ways to move an LLC to a new state.
Option #1: Maintain your LLC in your Old State and Register as a Foreign LLC in your New State.
This is a particularly good option if you plan to continue doing business in both your old state and your new state. You will have to file state taxes in both states and you may have to file an annual report in your old state. (Arizona LLCs don’t have to file annual reports with the Arizona Corporation Commission.)
Option #2: Close your LLC in your Old State and Open a New LLC in your New State.
You’ll have to dissolve and liquidate your old LLC and start a brand new LLC in your new state. Filing paperwork for an Arizona LLC is fairly straight-forward, but a bit redundant to put the same information on each of the forms. If you have a single-owner LLC, the process mainly involves closing the bank accounts for the old LLC, filing the proper paperwork with your old state, filing the old LLCs final taxes and starting anew by filing LLC paperwork in your new state and opening new accounts for the new LLC.
Option #3: Create an LLC in your New State and have each Member Transfer their Ownership Interest from the Old LLC to the New LLC.
LLCs are owned by Members. (I encourage all my clients to create manager-managed LLCs where every manager is a member but not every member is a manager). Each member owns a portion of the business and they can use what they own from the old LLC to essentially buy-in to the new LLC. This should be accomplished with contracts. Talk with your accountant about any tax implications in doing this and whether a business valuation should occur on the old LLC before the transfer occurs.
Option #4: Create an LLC in your New State and Merge it with the Old LLC.
If you merge two LLCs, the IRS considers it a continuation of the old LLC and allows you to keep the same EIN. You must create a plan of merger and each LLC must vote to approve the merger based on the LLC’s operating agreement or that state’s laws. If the merger is approved, you must file an Articles of Merger with the new state’s corporation commission.
The Arizona Corporation Commission does not have a form for Articles of Merger. You must create a document that complies with the state’s LLC merger laws along with the Commission’s cover sheet and pay the $50 filing fee ($85 for expedited filings). Before you proceed with the merger, discuss your plans with your accountant to understand the tax implications for each member.
If your business plans involve moving to a new state, discuss your plans with your accountant and lawyer to determine what the best course of action is for you. Even if you have a business that solely exists online, there may be good reasons to move your business to your new state.
If you’re planning to move your LLC to or from Arizona, please contact me to discuss you options for making it an easy transitions. You can also connect with me on Twitter, Google+, Facebook, YouTube, LinkedIn, and you can subscribe to the Carter Law Firm newsletter.
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