A Guide to Moving Your Business to a New State

To small business owners who are planning to move their company to a new state: use this checklist to help you navigate the process.

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Staffing, expenses, taxes, marketing — here's what to consider before you move your business

Small business owners have a variety of reasons for moving their business to a new state. Maybe it’s to be closer to family members or to better connect with your business’ target market. For other businesses, relocating to a different state may make more sense financially if the cost of real estate has gone up at home, or if other changes have occurred in your home state that have made it less business friendly.

Whatever the reason, picking up and moving your operations to a new state can feel daunting at first, and owners may not even know where to start. For small business owners moving their business to a new state, it’s helpful to have a thorough checklist on hand to use as you navigate through the moving process.

1. Start planning early 

Months before your scheduled move to a new state, start researching the specifics of your new business location. Find a good accountant in your new location who can help you pinpoint any tax incentives.

If you’re a brick-and-mortar business, you should start learning more about the city or town where you’ll be relocating your business, and connect with a realtor specializing in commercial real estate. They can help you find the right retail space for your budget and your demographics. Doing this early will give you time to negotiate for the right space.

If you’re a brick-and-mortar business, you should start learning more about the city or town where you’ll be relocating your business, and connect with a realtor specializing in commercial real estate. They can help you find the right retail space for your budget and your demographics.
Also, think about whether you’re going to want to keep your old business location up and running until the new one is ready to open its doors. Maybe, instead, you want to close your old business first to give yourself adequate time to prepare for and to carry out your move.

You’ll also want to make sure to:

  • Start the process of changing your business’ mailing address with vendors and any other people or businesses that should have your new address.
  • Sort out ending service with a phone company or internet provider, if needed.
  • Source packing supplies and start calling around to different movers to find one that suits your needs. The more you’re able to firm up ahead of time, the better idea you’ll have of what the move will cost so you can figure those expenses into your planning for the year. Creating a detailed timeline can help you figure out and keep track of when you need complete key steps by, including packing and booking a mover.

2. Think about staffing 

Think about whether you’ll be able to keep any of your current employees on and let them work remotely, or whether you’ll need to find new staff in your new state. If the former, and you’ve never had full-time remote staff, you may want to craft a policy around remote work and make sure your staff are adequately set up to work from home.

If you have to let your current employees go, do it gently. Give your current staff time to find a new job if you can. Otherwise, assure them that you or someone else at the company is available and happy to serve as a reference when they apply to other jobs.

Also, if your move is happening quickly, you may not have the time to properly vet new workers entirely on your own. Consider working with a staffing agency that can help you find temporary help in the new state.

3. Figure out what business changes you’ll need to make

The paperwork that you’ll need to file and other business decisions you’ll need to make when moving your business to a new state will depend on how you’ve legally structured your business.

Generally, if you started your business as a sole proprietor or as a partnership, the process should be much simpler. If you’re set up either as a corporation or as an LLC, you’ll have several decisions to make and some extra steps to take.

Generally, if you started your business as a sole proprietor or as a partnership, the process should be much simpler. If you’re set up either as a corporation or as an LLC, you’ll have several decisions to make and some extra steps to take.

Moving your business as a sole proprietor or a partnership

Typically, for small businesses that operate as sole proprietors and partnerships, the process of moving is simple as long as you properly tie up all loose ends before you leave for the new state.

Sole proprietors and partnerships generally should:

  • Cancel your local business licenses and any permits.
  • Apply for new business licenses and permits in your new state, as needed. While some states will require licenses for sole proprietors, others do not. Check your new state’s Secretary of State website for more information.
  • Pay any outstanding fees you might have such as sales or state employment taxes.
  • If you bank through a local bank or a credit union, consider switching your business accounts to a bank that’s located in your new state.
  • Inform the IRS so your tax ID or EIN will match your new address. The IRS should mail you a confirmation letter of the change of address within 4 to 6 weeks.
  • If you have a DBA (doing business as), you should remove your name from your current state’s records and then apply for one in the state. Assumed business names are typically registered with a county clerk’s office.
  • Speak with your accountant about tax implications of the move. If you’ve moved part way through the year, when tax time rolls around, you’ll need to submit tax returns for both states — the one you’ve left and the one you moved to.
  • Let clients, vendors, and customers know about the move well in advance. Give them 90 days of notice, if you can.

Moving your business as an LLC or as a corporation

Moving states as an LLC or as a corporation can be a bit more complicated for small business owners. If you’re a small business owner who’s structured your business this way, you should review your various options, and you may want to consult with an attorney who can help you figure out the best strategy based on your business needs and your ultimate goals.

A first step for a corporation or an LLC is for all of your organization’s board members to agree to the business being closed and moving. You should document that vote and the agreement in the board meeting minutes.

LLCs and corporations then have several options as to how to move operations to a different state, and each one comes with its own pros and cons. The most common ways to move as an LLC or corporation include:

Set up a foreign LLC

One possible option is to keep your current company as is in the state you’re leaving, and then to register your company as a “Foreign Company” in the state you’re moving to. So, your company will then essentially be registered in 2 states at the same time. This option is often the simplest, the quickest to accomplish and it can be the most cost effective.

However, this option also comes with its fair share of potential cons. Being registered in 2 states at the same time could be expensive for small business owners due to multiple fees you may have to pay, and it could complicate your taxes. You could also find yourself with unintended liability issues, depending on how your contracts are set up and what laws you’re subject to.

Making an asset purchase or merging companies

Make an asset purchase. With this method for moving your business, you first create a company in the new state. Next, your new company acquires the assets and liabilities of your previous company. Finally, you dissolve your original company. A con of this method is that in leaving your old company behind, you’re also parting with its FEIN and any credit that you’ve managed to build up with your company during the years that you’ve already been in business.

Merge companies. This method of moving is similar to making an asset purchase. The difference is that, before you close your company in your previous state, you merge it with the new company that you’ve created in your new location. By merging, you’re able to keep your existing FEIN and any credit that you’ve built up over the years. A con of this method, however, is that it can be costlier since it requires several more steps, including filing more paperwork and paying some additional fees. Companies that owe back taxes or that otherwise aren’t in “good standing” may also have trouble with this method.

Checklist

If you choose to either make an asset purchase or to merge companies, you’ll need to make sure that you follow the proper steps when you close your original company. Failing to do so could lead to fines or penalties that could add up.
If you choose to either make an asset purchase or to merge companies, you’ll need to make sure that you follow the proper steps when you close your original company. Failing to do so could lead to fines or penalties that could add up.

You’ll need to:

  • First, form your new company in the new state.
  • If you’re merging, next transfer all of your assets and liabilities.
  • If you’re doing an asset purchase, the next step is to obtain a new FEIN.
  • After that, you can close your company in your prior state. Make sure to carefully research how to do this because the process can vary depending on which state in you’re in and also your type of business. Typically the process is to file a “Certificate of Termination” or an “Articles of Dissolution” document with the state. Before your company can be closed, you’ll first need to pay any outstanding taxes or fees.
  • You’ll also need to apply for a business license in your new state, plus any permits that you might need to operate your business.
  • Finally, let the IRS know about the move by updating your business address. If your business is a corporation, you can use Form 966, which is for corporate dissolution or liquidation.

When you move your small business to a new state as an LLC or as a corporation, you’ll also need to make changes to key legal documents. Know that states vary in their requirements. Documents that you may need to change include:

  • Governing documents. So that key documents mesh with your new state’s laws, you’ll need to rewrite your bylaws (if you’re a corporation), your operating agreement (if you’re an LLC), or your partnership agreement (if you’re a partnership).
  • Formation documents. These are the documents that you file in order to register with your new state. They include Articles of Incorporation (for corporations), Articles of Organization (for LLCs), or partnership registration documents.

4. Keep track of your moving expenses

As you plan for and carry out your move to a new state, make sure to keep track of all of your moving expenses and save your receipts. When tax time rolls around, you may be able to deduct a good portion of these expenses from your taxes. Consult your accountant who can help you figure out what you can deduct and what you can’t.

5. Come up with a revised marketing plan, and execute it 

Depending on your type of business and the industry you’re in, when you move to a new state, you may not be able to keep most of your existing customers. To help with the effort to get new customers, design a marketing plan before you go; once you’ve relocated and you’re ready to open your business in the new state, put your plan into action.

Consider all of your marketing options, including advertising in local newspapers and on the radio, extending special promotions including custom coupons, and even buying Facebook ads. Search for local business networking groups that you can join such as your new state’s local Chamber of Commerce so you can start networking with fellow local business leaders and building community in your new state.

While moving your small business to a new state can at first feel overwhelming, taking the process step by step will help make the move go as smoothly as possible. Once you’ve completed all of the necessary steps to complete your move and you’re fully set up for business in your new state, you’ll be able to focus once again on enhancing your products or services, on adding to your customer base, and on growing your small business.

Check out our People Ops Podcast episode “How do I prepare for minimum wage changes as my people move?”

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