Does anyone really like moving to another state? There are moving costs to consider, the pain of boxing up your belongings, selling your home, buying/renting a new one, saying goodbye to friends, and so much more.
If you are considering moving your Corporation to another state, there are a whole new set of issues to contemplate.
In this article, I will explore, the main considerations of whether to move your INC’s charter or consider other registration options. I will also give you your options and detailed instructions for how to complete your Corp’s move.
01 Are you ready?
We get asked by customers each week about moving their Corporation from one state to another. Sometimes, it is because they mistakenly filed in the wrong state. Sometimes it is because they didn’t research their formation state enough before filing and didn’t realize the costs necessary to maintain an INC there. More often it because their business is expanding operations in another state. But, most often it is because the director(s), or officer(s) or shareholder(s) of the Corporation have moved to another state and need to move their business operations with them.
With each reason, there are different considerations which determines your next step. I’m going to address the two most common reasons.
02 Moving or presence?
The first consideration you must examine is whether your INC is actually moving to another state or just needing a physical presence in another state? In other words, if your INC is going to be starting operations in another state, but will still also have operations in its formation state, then you are most likely wanting to file for foreign authority to another state instead of moving the charter there.
03 Definitely moving!?
If your Corporation will no longer be operating and/or have business operations in its formation state and it will be moving to another state; then you will want to move your charter to that new state.
04 Is there a formal process?
Hopefully, the state to which you are moving your INC to has a formal process for this type registration. If the new state does, it will be a simple matter of filing articles of domestication or articles of conversion (the name used depends on the state) with the new state’s corresponding filing agency and paying a filing fee. This fee is usually similar to, but sometimes slightly more than a new filing.
We’ve researched many of the states and listed below those that do have a formal process and those that do not.
State’s that do (for corporations)
Here is a partial list of those states that do have a formal domestication process:
CA, CO, DE, FL, GA, NC, NV, TX, VA, WY
NOTE: States have different rules for INC’s than they do for LLC’s. So, don’t assume these lists apply for an LLC (see How to move your LLC to another state? for more info).
States that don’t (for corporations)
These states do not have a formal domestication process, meaning you must follow one of the “alternatives” below:
AK, AL, AZ, CT, IL, IA, KS, LA, MA, MD, NM
05 The most common alternative
Assuming your new state does not have a formal process for domesticating your existing INC and recognizing the existing state; you will have to form a new INC in the new state and then cancel the charter in the old state.
PLEASE NOTE: Even though your new INC will be considered “new” in the new state, you will still be operating the INC like an existing INC; this is simply the process you must take to move the INC’s charter to the new state.
06 The merger alternative
Some people prefer to not simply form a new entity and cancel/dissolve the old one. Instead, again assuming the new formation state does not have a formal process, you could form a new INC in the new state and rather than simply cancelling the old charter, merge it into the new charter. This process is most certainly more complicated and more expensive; and again may not be simply possible in the new formation state (there may not be a formal process covering this as well). Additionally, in the original formation state, you would want to file a merge-out document, if this were available. Otherwise, a cancellation is filed.
07 Don’t forget original formation state!
Whether your new state might formally recognize your Corporation, through a formal process for domestication, or if you must follow an alternative; your old formation state must still be dealt with.
If you do not, you will essentially have two Corporation’s and the original Corp. will still be incurring annual fees and maybe taxes. So, after you have formed the INC in the new formation state, you will want to cancel the charter in the original state, usually by filing a certificate of cancellation.
Once you have completed the process (registering in the new state and cancelling/merging-out), although you may have completed the state filing process, but you’re not completely done.
08 Don’t forget the internal governance!
Regardless of the state’s process for moving your Corporation to another state, your corporation must follow proper corporate governance, including documenting the approval by the directors and shareholders to move the corporation from one state to another.
Directors – The directors must hold a Special Directors Meeting to approve the move.
Shareholders – Usually after this, the shareholder(s) must meet for a Special Shareholders Meeting to approve the move.
Both meetings should be documented in corporate minutes, signed (usually by the secretary), and stored in the corporation’s records.
09 Who else to notify?
When you’ve completed the state’s filing process, you must notify others about the change in your formation state. Here are the most common:
Just like a personal move, your INC should notify the post office with the same change of address notification.
The IRS’ records need to be updated for your INC. For more information on how to update your IRS record see: smallbiz.com/Howto/notify-IRS-of-changes-to-EIN.
This one may seem obvious, but it is sometimes missed by companies. Even if the day-to-day operations are online, it might be nice to communicate your change, including reasons for the change and how it will not affect them (or how it will if there is a big positive to it). Better to hear it from you rather than some other source you don’t control.
Vendors & Partners
Remember that your full INC name (let’s say it’s ABC, Inc.) includes the state in which it was formed. For instance, if were formed in Florida, then the ‘full’ name would be, “ABC, Inc., a Florida Corporation”. Naturally, if you move the charter to another state, your ‘full’ name would have changed as well. If your INC signed vendor and partner contracts using its old full name, it will need to make changes reflecting the new state.