How to Move Your Business to Another State

Decide whether to move the entity or form a new one

Depending on your state and structure, you may be able to convert or redomesticate the entity, or you may need to register as a foreign entity or form a new one. Ask an attorney.

There are usually three paths:

• Register as a foreign entity in the new state while keeping your original state of formation. This is common when you keep the home-state entity but operate elsewhere.
• Convert or redomesticate where both states allow it. The entity moves and keeps its history.
• Form a new entity and transfer assets. This can trigger tax and contract consequences.

Rules differ by state and by entity type. Check with the Secretary of State offices involved, and talk to an attorney and accountant before choosing. Contracts, leases and loan agreements may also restrict changes in structure or address, so read them first. Our LLC overview and guide to business structures give background.

Taxes, registrations and licenses

You will usually need new state tax registrations, sales tax permits if you sell taxable goods, local business licenses and any industry-specific permits.

Work through these:

1. State income or franchise tax. Register and learn filing deadlines. Some states tax differently from your old one.
2. Sales and use tax. Register where required and understand what you must collect.
3. Payroll taxes. New state withholding and unemployment accounts.
4. Local licenses and zoning. City or county business license, occupancy permit.
5. Professional or trade licenses. Many do not transfer between states.

Close out accounts in the old state properly, and file final returns if required. Missing this step can leave you with penalties for a state you no longer operate in. For tax setup, see business tax ID numbers. Ask your accountant about nexus, which can mean you still owe taxes in the old state if you keep customers or staff there.

People, payroll and insurance

Employees who move or work remotely create payroll, tax and benefits changes. Insurance policies must match the new state's requirements.

Decide who is relocating and who is staying. Staff working in a new state need that state's withholding and unemployment accounts and may be covered by different wage rules. Workers' compensation and other required coverage differ by state. Update your general liability, property and professional policies with your agent. Tell your payroll provider early, since setup can take time. Our piece on types of business insurance lists coverage to review.

Banking, contracts and customer communication

Update your address with banks, the IRS, vendors, customers, the post office and online listings. Review contracts that name your location.

Make a list of every place your address appears: bank, funders, insurance, payment processors, website, Google Business Profile, invoices, contracts, leases and tax authorities. Notify customers ahead of time and, if you serve a local market, explain what changes. You may keep your phone and email, which makes the transition easier.

Tell any funder you have loans with. Many agreements require notice of a change in address or ownership structure. Your business bank statements also become a record of the move, so keep clean books during the transition.

Budget the cash cost of moving

Expect costs for registration fees, moving equipment, new lease deposits, build-out, overlapping rent, lost work during the move and new marketing.

Illustrative budget: state filing and legal fees $2,500, moving equipment and inventory $8,000, new lease deposit and first month $12,000, overlapping rent for two months $10,000, new signage and marketing $4,000, buffer 20 percent. That is $36,500 plus $7,300, about $43,800. Your numbers will differ.

Revenue often dips during a move, so plan for a slower month or two. A business with a steady customer base can keep serving remote clients during the transition. See our guide to cash flow projections to model the gap.

Funding a relocation

If you need cash for deposits, equipment moves or build-out, working capital or equipment financing can bridge the cost when the payback is clear.

ROI Funder serves businesses in all 50 states and considers 500+ FICO, 6+ months in business and $20,000+ monthly revenue. A working capital advance can cover deposits and moving costs, and equipment financing can fund new machinery for the new location. Approved, complete files can be funded the same business day. Show your accountant the payback: if the new location lowers rent or brings in more customers, estimate the added monthly profit and compare it to the payment.