Info You Need to Know About Moving Your Business Domicile To A Different State
If you decide it makes sense to relocate your company from the state of formation to a different state, there are a series of steps that must be taken in order to change the company’s domicile. This process is known as domestication. You are able to change the domicile from any state, but can only domesticate to a state that recognizes domestication.
Benefits of Domestication
The benefits of domestication include keeping the same tax ID (EIN), the same company structure, and with some states also the original date of formation. The disadvantage is cost and relative complexity of the process, compared to such alternatives as foreign qualification.
To change your company’s domicile, you must first be in good standing with the original state of registration. If your company is not in good standing, you need to first bring it to good standing by completing the necessary filing paperwork and paying specific fees. You might also be required to pay fines that have accumulated, or go through the process of reinstatement if the corporation was administratively dissolved.
There are several steps necessary to complete domestication. Those steps vary from state to state. Generally, the first step you need to take after ensuring your company is in good standing is to obtain a certified copy of your company’s articles of incorporation and a certificate of good standing from the original state of formation. Next, you need to draft the Articles of Domestication and file with the new state. After that, you need to dissolve the corporation in the old state and submit confirmation of dissolution with the state of domestication.
Many states, including the original and destination states, have various additional filing requirements that must be satisfied before domestication is complete, including:
- An Initial list
- Statements of information filings
- Notifying the IRS
Various licenses and permits should also be obtained from your corporation’s new state of domicile.
States Supporting Domestication
Currently, 27 states support domestication in one form or another. But keep in mind, the exact rules will vary from state to state. For example, some states only allow domestication of corporations. In addition, there are some states that do not allow domestication from other specific states. For example, you cannot domestic a corporation that was formed in New York and domestication is sought in California.
In the DMV, both Virginia and the District of Columbia recognize domestication, but Maryland does not. Since Maryland has no provisions for entity domestication, if you plan to move your corporation to this state, you would need to choose between qualifying your existing company as Maryland Foreign Entity or dissolving it in the original state of registration and forming a new company in Maryland.
For more information about business entity formation, domestication, and other business planning issues, contact InSight Law. Our law firm is focused on client-first service. Take a moment to watch this video featuring an actual client discussing their experience with our business and estate planning law firm: