If you have plans to relocate your business to another state, there are a number of factors to consider. Aside from potential physical logistics, such as finding a new space, moving or terminating and hiring new employees, there are corporate matters to consider. Consulting a small business attorney is the best first step you can take, but here are three ways you can go about moving your corporation to another state if you choose to close your doors in the current home state. You can:
- Close your corporation in the original state and re-form it in the new state; or
- Keep your corporation in the old state, but file to operate as a foreign corporation doing business in the new state; or
- Form the corporation in the new state, and then merge the old corporation with the new one.
Before making your decision, consider these other factors.
- State fees – If you register as a foreign corporation in a new state, you may have to pay duplicate fees, such as those associated with annual reports or franchise taxes.
- Dissolution fees – If you decide to dissolve your old corporation, whether you merge it into a new one or form a new corporation entirely, there may be dissolution fees. Depending on your state, you may have to prepare formal documentation, file it, and then pay any associated outstanding taxes or fees.
- Valuation of Business – When merging or selling company assets, your lawyer will typically suggest having a formal valuation of the business performed for tax purposes, which can be expensive and time-consuming depending on the size of your business.
- Notice to Creditors – If dissolving your company, a formal notice to creditors is also required in most states, so the cost of providing such notices should be considered in determining whether or not to dissolve the company or not.
- Other Costs – In addition to state fees and taxes, it is wise to consider the time and expense involved in forming and dissolving or merging your companies. If you do it yourself, then the value of your time should be considered. If you hire a business attorney to perform these tasks, then their attorney’s fees should be included.
Check With a Business Attorney
There are many steps involved with moving your corporation to a different state, and the process will vary depending on where you are relocating. Before making this critical decision, be sure to check with a business lawyer to ensure you have considered all of the important aspects of each option and have formulated a plan and budget for making your move. Contact our trusted attorneys for more information or a free evaluation.