If your LLC adopted cloud-based solutions in an effort to digitize the business over the course of the past year or two, a change in scenery might be easier than you think. Moving an LLC to another state can be accomplished by simply filing a few forms. That said, there are a few potential pitfalls to be aware of.
Steps to redomesticating the LLC
- Complete your current state’s Articles of Dissolution form, but hold off on filing the form.
- In order to apply for domestication in the new state, you’ll need:
- Articles of Domestication
- Certificate of Good Standing from the current home state
- Copy of the completed (not filed) Articles of Dissolution form for the existing home state
- Once approved in the new state, dissolve the business in the state where it was originally formed.
Redomestication is not the same as foreign qualification
It’s important to be aware of the differences between redomestication and foreign qualification. Although they both involve registering in a new state, they are different. Redomestication allows you to conduct business in the new state, but not in the previous state in which you did business. Your company will cease to exist in its original home state once you register in your new home state. Foreign qualification allows you to register in a new state in addition to the business’s home state. If you plan to do business in both states, foreign qualification may be a better option.
Ensure all business license and permit requirements are fulfilled in the new state
Depending on the nature of your business, there may be licensing and permit requirements. These are typically per state and local government agencies. Do your research to identify any requirements before proceeding with business as usual to avoid hefty fines. When in doubt, contact local professional organizations for assistance.
Determine payroll taxes
Chances are your new state will have slightly different payroll tax rates. Income tax, unemployment tax, and possibly even local taxes are all factors that you should consider before choosing a new home state, and revisit once you have relocated. If you choose Florida as your new domicile, you and your employees will enjoy no income tax (we’re one of 7 states without income tax). This all may sound painful, but it doesn’t have to be. When computing the new payroll taxes, using a cloud-based payroll app (such as Gusto) will simplify and automate the process. Keep in mind that if you retain employees in other states, you will need to follow the withholding rules of the state where the work is performed.
Cloud-based apps will make the entire process smoother
While the process of filing the required documentation for redomestication is a simple process, the act of moving your entire business to a new state may be more labor-intensive. There will be a lot of expenses, record keeping, and requirements in your new state that you’ll need to keep organized and well-documented. If your business books are stuck in excel, this process can become overwhelming and messy.
Migrating your books to the cloud and digitizing the business back office can make your move that much less stressful as changes require the mere click of a few options. Your books can live securely in the cloud in Xero’s central hub, with personalized dashboards and real-time reporting from any of your devices. Expense entry, reporting, and coding can become an automated process with a simple scan of a receipt when using Expensify. If inventory is your main asset, Dear can help you keep track of your stock, what’s been ordered, and the value.
Moving can be exciting (especially when it’s to the Sunshine State, but we know we’re biased). If you are ready to relocate your LLC but need a hand bringing your business along, send us a message. We can discuss the cloud-based accounting apps beneficial to your business, not to mention the many benefits of bringing your business to Florida.