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Starting and running a business is a challenge, but the endeavor seems nearly not possible when you choose to start all once again in a different state.
I do not mean opening an out-of-state location, but moving what you are promoting from one state to one other. My company has helped many business owners who are looking to relocate. The key is to take the process step by step.
No matter your reason for moving, starting over in a recent state requires detailed planning, in-depth research, and patience. Here’s what to consider if you’re considering about relocating what you are promoting.
Do your research
Before you do anything, it’s crucial to do your research. Consider all the legal and regulatory issues. Make sure you understand the recent state’s steps regarding business formation, employment, licensing, and tax requirements.
Next, discover the specific reasons you’re moving. Are taxes an issue? While nine states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming) currently don’t levy an income tax, you’ll need to discover about any local business, sales, property, and franchise taxes that your state requires.
Are you moving to a state with a lower cost of living (COL)? These expenses are defined as “the cost of maintaining a given standard of living,” including housing, food, transportation, taxes, health care, and more. COL varies by state and city, so don’t eliminate a state based on costs in one particular location.
Access to market trends and opportunities in the states you’re considering moving to is also key. Consumer demographics, market competition, and economic indicators can all impact your success. Compare statistics on industries and business conditions across the United States
Every state boasts about its expert workforce, but the reality of your organization’s ability to attract and retain the right talent will vary. What are the going wages for your style of business? Some corporations profit from being positioned near a college, which provides a pipeline of potential employees. The U.S. Chamber of Commerce tracks where labor shortage hits the hardest.
Also consider your organization’s infrastructure needs. Depending on what you are promoting, issues equivalent to transportation, access to suppliers, and availability of distribution centers can all impact operations. Contact state and local economic development agencies for information about infrastructure and resources.
Many locations can meet what you are promoting criteria. However, they need to also meet your quality of life requirements. Does the state provide the healthcare, education, and lifestyle options you wish? Does the climate suit you? Can you discover the style of housing that suits your personal situation?
Domestication of business
We typically recommend that entrepreneurs who own LLCs and corporations domesticate (or re-domesticate) their businesses. This implies that what you are promoting ceases to exist in the state in which it was formed and only exists in its recent location.
Only 31 states and Washington, DC allow domestication. Each state has its own rules and processes. Check with Office of the Secretary of State to see which states allow domestication and what their requirements are.
Generally speaking, the domestication process goes in a specific order: you file for domestication in your recent state, then dissolve what you are promoting in your current state. The domestication process involves obtaining the consent of all board members, filing for Articles of Domestication or Articles of Continuance, and providing a Certificate of Good Standing and a copy of your Articles of Dissolution application from your previous state. Once approved, you file Articles of Dissolution in your previous state. You must pay any outstanding fees or taxes.
Domestication has several benefits:
- You do not need to change your federal taxpayer identification number (worker identification number/EIN).
- Less paperwork and tax consequences.
- Your business can maintain its credit history.
- You’ll get monetary savings because you will not have to pay annual reporting and fees associated with doing business in multiple states.
If your corporation or LLC wants to keep its old state as its state of formation or do business in each states, you will need to file for foreign qualification in your recent state. While each state has its own foreign qualification process, you possibly can typically apply online for a Certificate of Authorization and pay the fee.
Maintaining multiple locations means you will need to appoint a registered agent in a state where you are not positioned. This person must have a local address and the authority to accept legal documents and government notices on your behalf.
Sole proprietorships and partnerships
Transferring a business is simpler if it is a sole proprietorship or a partnership. There is still a process you will need to follow:
- Cancel your local business licenses and permits and apply for recent ones in your recent state.
- Pay any outstanding fees and taxes.
- Withdraw any adopted names (Doing Business As/DBA) from the Secretary of State’s office and apply for a DBA name in the recent location.
- If your bank does not have branches in your recent state, close your bank accounts.
- Inform the IRS of your recent business address.
- If you progress mid-year, you’ll have to pay taxes in each your recent and old state.
HR Considerations
When you choose to move, it is essential to inform the staff as soon as possible and be transparent, honest and empathetic. It is best to arrange a personal meeting, provide time for questions and provide a timeline for the move.
Are you planning to offer your team the opportunity to relocate with you? Most small businesses can’t afford to cover the costs of relocating employees, which might cost 1000’s of dollars. Will you offer them the option to work remotely?
If not, consider offering them a severance package and/or help transitioning. If you know of local corporations looking for talent, offer to introduce them. And make sure you provide employees with letters of suggestion.
Taking the mandatory steps to ensure a smooth transition will help make sure you have a smooth start in your recent location.