Business Transactions

When You Move to a Different State, Should Your Business Move with You? Part Two.

In Part One of this two-part blog posting, I discussed whether you should change the state under which your business is organized when you move from one state to another. In this Part Two, I discuss how you can make such a business move if you decide to do so. The process varies by state. Some states streamline the process; other states require more effort.

Suppose you are a Maryland resident who operates an internet-based company organized as a Maryland LLC. You move to New York and decide to change your Maryland LLC into a New York LLC. Here are the steps involved:

Step One. Form a new New York LLC by filing Articles of Organization in New York. If the name of your company is not available in New York, you will need to choose a new name.

Step Two. Merge the existing Maryland LLC into the new New York LLC by filing Articles of Merger in New York under Section 1003 of the New York Limited Liability Company Law. The Articles of Merger should designate that the New York LLC is to be the surviving entity.

Step Three. File Articles of Merger with Maryland under Section 4A-701 of the Maryland Limited Liability Company Act. Indicating in your Articles of Merger that the New York LLC will be the surviving entity is sufficient for the Maryland LLC to be dissolved upon completion of the merger. You do not need to file Articles of Dissolution in Maryland.

When You Move to a Different State, Should Your Business Move with You? Part One.

There are many corporations and LLCs with only one or two owners. When the owners move their residences to another state (even if it is a neighboring state), should the business also move? For example, if you organized your company as a New Jersey LLC while you were a resident of New Jersey, should you change your company to a Pennsylvania LLC when you move to Pennsylvania?

The answer depends on your specific circumstances. By not packing up your LLC or corporation and moving it with you to your new state of residence, you may double your business organizational expenses without producing any corresponding business benefit:

Leaving your business behind means you must maintain a resident agent in your former state of residence. If you use a home or office address as the resident agent address and that home or office address will no longer be available to you after your move, you will need to pay for a resident agent service. Resident agent services start at $100 to $200 per year.

Even if you leave your business organized under the laws of your former state of residence, you may still be required to register your business in your new state if your business is deemed “to be transacting business” in your new state. In this case, you would be required to register your business as a foreign LLC or foreign corporation. See my blog posting “In Which States Are You Transacting Business?”

In Part Two of this blog series, I’ll discuss the process of moving your company from one state to another.