The easiest way to change the state of formation is through a statutory transaction. In some states, this is called a conversion; in other states, it is called a domestication.
Many states allow you to formally transfer your LLC from its current state to California via conversion. Not all states allow this, so you’ll need to make sure it is permitted by the state you are moving out of.
First, you file the Articles of Organization – Conversion (Form LLC-1A) with the California Secretary of State.
Then, you must file a Statement of Information with the California Secretary of State within 90 days after filing Form LLC-1A and biennially thereafter.
Once California has officially approved your conversion, you’ll then need to dissolve the business in its previous state.
It’s important to research any required licenses and permits in California before doing any business here. This may include sales tax registration so you can report and remit sales tax on taxable goods and services sold in the state.
Be aware that conducting business without the proper licensing can lead to hefty penalties and legal problems. Also, if you have state or local business licenses and permits in the previous state, you must cancel them and apply for the required licenses and permits in California and local jurisdiction.
If you plan to have employees in California, you must register to report and pay the state income tax (SUI) and state unemployment insurance tax (SUI).
Remember to let the IRS know of a change in business location. That way, the agency can update its records and have the correct address on file for your business’s EIN (Employer Identification Number) or other tax ID number.
Moving an LLC to a different state is often a simple process. Before you make the move, however, you should consider your options and get an accountant’s advice on the tax consequences of changing states.
If you’re thinking of moving your business to California, feel free to book a free, no obligation consultation with me here.