Whether you’re a location independent entrepreneur enjoying the freedom lifestyle, moving for a spouse’s job, or to be closer to family, many of us will experience a move to another state at some point in our business. If and when you decide to move to another state, there may be a few things you need to do in order to ensure your business can properly operate in your new state! If you’ve ever heard someone mention registering as a “foreign” LLC or corporation, this is where the term comes in.
The first question to ask is: Are You a Sole Proprietor or LLC/Corporation?
When you are doing business as a Sole Proprietor, you are not legally separate from your business, and as such, there is no requirement to qualify as a foreign business when doing business in another state. However, if you have registered a “DBA” (doing business as) in your home state, and move to a new state (or expand into another state!) it’s likely you would need to register this DBA in the new state. The “Small Business Administration” chapter in the new state could answer that question for you, or you can find answers online.
While the registration requirements are likely simple, one thing to keep in mind when you move as a sole proprietor is tax budgeting! Many states have different requirements in terms of income tax and other regulations, so if and when you move to another state, check on the local tax requirements to make sure you’re setting aside enough money as a sole proprietor.
If you are doing business as an LLC or Corporation, you’ve got a bit more work to do. When you do business in more than one state, or you register in one state and then move to another, you will need to register as a “foreign” LLC in that new state. This term “foreign” LLC simply means you have registered your business in another state, and are seeking to be recognized as a business in the new state where you now live, or where you have expanded your business. For example, if I operate an online business LLC in California, but later move to Texas, I would need to register my LLC as a “foreign LLC” in Texas.
If you’re an LLC, it’s a good idea to register in all states where you are “doing business.” …So what does “doing business” actually mean? Most agree that selling online across the country does not mean you will need to register your LLC in all states; however, if you move to another state, have a bank account, office, or physical store location in the second state, it’s a good idea to register there as a foreign LLC.
To register, the best way to start is to go to the new state’s Secretary of State website, and find the section on registering as a foreign LLC – it will likely be a certificate or application, plus a registration fee. Once you fill out the certificate or application, check and see if your new state requires a copy of the original LLC application, then send in the application and the registration fee (with a check from your business account!)
As some states require the letters “LLC” to be included in your business name, it’s a good idea to include it anyway, so you are set if you need to register as a foreign LLC in another state. Also, check your new state to see if biannual registration reports are required, to make sure you remain in good standing with all states you’re registered in!