What are the prerequisites for relocating your company from one state to another?
If you want to relocate your company permanently from one state to another, you'll need to go through the process of domestication or redemobilization. Here are the basic steps necessary:
- Ensure that your company's current status of formation is in good standing. This implies that all obligatory filings, fees, and taxes are current.
- Get a certificate of Good Standing from the original state that certify your Articles of Incorporation (or Organization) and a Certificate of Good Standing (or your organization).
- Ensure that the newly established state receives the Articles of Domestication (or Articles of Continuance). This document formally asks for the relocation of your company's headquarters.
- To submit more documents, you must provide a Certificate of Good Standing from the original state and a copy of the Articles of Dissolution (completed but not yet submitted) for the original state.
- After approval from the new state, dissolve your company in its original state.
- Update your records by notifying the IRS, updating your business licenses, permits, and informing all business partners, vendors, and customers of the change.
- Make sure to stay in compliance with the new state's regulations and requirements.
What are the distinctions between domestication and foreign entity?
Domestication:
Domestication is the act of transferring your business's legal location from one state to another. Your business's state of incorporation is basically altered. These are the important aspects:
- A new state has been chosen as the legal domicile for your business.
- The original incorporation date for the business is retained and its current tax ID and history is preserved.
- To comply with regulatory compliance, the business must follow the laws of the new state for incorporation and disband in the original state after the process is finished.
Foreign Entity Registration
Foreign entity registration is the process of registering your business to legally conduct operations in a state other than its original incorporation state. These are the most important points:
- Your business keeps its original legal entity and registers as a foreign entity in other states where it wishes to operate.
- The original state of incorporation is unchanged and there has been no change in domicile.
- The business must be in compliance with the laws and regulations of both the original state and the foreign states in which it is registered.
Summary
- Domestication is the act of moving your business's legal home to a different state, which necessitates dissolution in the initial state.
- Foreign Entity Registration is the process of expanding business operations to other states while maintaining the original state of incorporation.
