The essence of life is change, and one of the things people change quite frequently these days is the place where they live and work. This change also affects home-based business owners. Maybe your spouse found a great job in a different state. Maybe both of you decided to move closer to your adult children. Whatever the reason, you may have to change states. So, what happens to your home-based business?
Your business must move with you, and this move means deregistration in your old state and renewed registration in your new home state. This procedure is also valid for 100% of online businesses. Although your operations still take place in the cyber world, tax filing and other federal and state regulations take place in the physical world of the United States of America, and you must comply with its laws and rules.
Today we will try to offer you a quick and helpful guide for moving your home business to another state from the point of view of the legal steps you must take. Let us get started!
1. If You Run the Business as Sole Proprietorship
Sole proprietorship or DBA (“doing business as”) is the simplest form of incorporation to move across states. All you have to do is follow through with the DBA registration procedure in your new state, and once this is completed, your old DBA registration will cease to exist.
Depending on the state you move to, you will go either to the state government office or the county clerk’s office to file the registration documents.
2. If Your Business is a Limited Liability Company (LLC)
The situation gets a little more complicated if you run your business as a LLC. You have three options to choose from:
⦁ Run your business as an out-of-state agent: this means that your business continues to be registered and headquartered in your old state. You will only file the out-of-state registration form in your new state and can continue running your business. However, this is not a good idea because you will have to file all legally required documents in duplicate (for the old state and new state) and you will most likely have to pay more taxes;
⦁ Register a new LLC in the new state: once you do this, you (and other associates, if any) have to transfer the membership interest in the new LLC;
⦁ Dissolve the old LLC and incorporate another: this is a great option if you want to avoid any tax consequences pertaining to the move. However, it may impact you in the sense that you may have to re-purchase the internet domain name in the name of your new company and create paperwork for the transfer of your business assets and insurances;
⦁ Register a new LLC and merge the old one into it: this solution removes the hassle of paperwork for assets, insurance, etc. However, if you do not want to incur tax consequences, at least 50% of the share capital participation must be transferred to the new LLC.
3. If You Run a S-Corp
The process of moving a S-Corp type of company from one state to another offers the same options as the one for LLCs. However, there are various tax consequences and for this reason you should consult with a lawyer and identify the most advantageous option for you.
Once your company has its new registration, you can move on to the next step, that is consulting the zoning laws and licensing requirements specific to your industry or niche. You can find a state-by-state guide to these licenses on the SBA website, which must be your first go-to source for up-to-date legal and tax information concerning your home-based business.