How to Move an LLC to Another State: The Expat’s Guide

Many small business owners with a US-registered limited liability company (LLC) choose to maintain it when moving abroad. After all, an LLC offers significant liability protection, allows you to choose alternative tax treatments, and may make it easier to work with US-based clients.

But at some point, motivated by tax rates in the state your LLC is established in, you may wonder how to move your LLC to another, more tax-efficient state.

The good news for expats is this: moving your LLC from one state to another while living abroad is possible and can come with significant benefits. That said, it’s not necessarily the most straightforward process.

Below, we’ll detail why you may want to move your LLC from one state to another, your main options, what steps you need to take, and more.

When does it make sense to move your LLC as an expat?

Each US state has different tax rates and regulations. Some, like California, have higher income tax rates and more demanding maintenance requirements for LLCs, while others, like Wyoming, have no income tax rates and less burdensome maintenance requirements.

Registering a business in a low-tax, low-maintenance state while still living within the United States may be beneficial in theory, but it’s often not in practice.

If your LLC still has business operations in your home state, you will likely still be subject to taxation and regulations there as well as the state of registration.

Moreover, the tax rates from a low-tax state would only apply to income sourced in that state. As a result, most LLC owners choose to register their business in their state of residence.

Once you move abroad, and assuming your LLC business operations move with you, the lack of business income sourced in the US  often creates flexibility with where your LLC can be organized. In such cases, moving your LLC to another state can be very beneficial. Some states to consider when choosing a state to register your LLC in include those with:

• No income taxes: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
• No corporate tax rates: South Dakota, Wyoming
• Low filing fees: Arkansas ($45), Kentucky ($40), Montana ($35)
• No annual fees: Arizona, Idaho, Minnesota, Mississippi, Missouri, New Mexico, Ohio, South Carolina, Texas

The implications of moving your LLC to another state as an expat can get complex, especially when dealing with “sticky states” like California, New Mexico, New York, Virginia, and South Carolina. 

For example, US expats who previously lived in California may want to think twice before changing their LLC registration. California’s State Franchise Tax Board is notorious for seeking state taxes from expats, even after they’ve left the state. While it is possible to move your LLC from California to another state while living abroad, the Golden State may charge you for back taxes or penalties if you show signs that your state residency never ended by eventually moving back.

Moving your LLC to another state as an expat

There are several ways to move your LLC from one US state to another. (Note that moving your US-registered business overseas is a different process entirely).

Among the most common strategies include:

Domestication

Domestication — sometimes also called conversion — refers to the practice of transferring your LLC’s registration from one state to another. This effectively closes your business in your current state and allows it to conduct business activity in the new one. While this is generally the easiest and most affordable option, only 27 states allow it.

The process for domestication varies depending on the state, but generally, you must:

• Gain approval from all business owners (in the case of multi-member LLCs)
• Obtain a certificate of good standing from your original state
• Create a plan for domestication (also called “articles of domestication”)
• Submit the certificate of good standing & plan for domestication in your new state
  • Note: The government body you’ll file these documents with varies by state, but it’s often the Secretary of State
• Dissolve the LLC in your original state:
  • Vote to dissolve your LLC (in the case of multi-member LLCs)
  • Receive tax clearance:
    • File your last tax return
    • Pay all outstanding taxes
    • Notify the relevant state body
  • File articles of dissolution (sometimes called a “certificate of dissolution” or similar)
  • Notify creditors of your dissolution (if applicable)
  • Liquidate your assets & pay off any debts
  • Close all business bank accounts, business licenses, permits, etc.

Domestication is usually a good option for those who:

• Own single-member LLCs, or multi-member LLCs where all owners are in favor of domestication
• Plan to set up operations in one of the 27 states that allow for domestication
• Prioritize simplicity & cost-effectiveness

Dissolution & registration

If you want to register your business in a state that doesn’t allow domestication, dissolution and registration are viable alternatives. The end result is ultimately the same as domestication — you’ll end your LLC in one state and form a new LLC in another — but it’s a bit more costly and complex. 

To dissolve your LLC in one state and register it in another, you must typically:

• Dissolve the LLC in your original state — as we explained above, the process is the same as during the domestication of an LLC
• Form an LLC in your new state:
  • Choose a name
  • Appoint a registered agent based there
  • File articles of organization (sometimes also called a “certificate of formation” or “certificate of organization”)
  • Appoint managers (only if the members themselves don’t plan to manage the business)
  • Draft an operating agreement that dictates how your business will function (not required by all states, but often a good idea nonetheless — especially for multi-member LLCs)
  • Comply with tax & reporting requirements:
    • Register for an Employer Identification Number (EIN)
      • Note: This is mandatory only for multi-member LLCs
    • Obtain state/local licenses, permits, etc. as required
    • Register for appropriate taxes (e.g. sales tax, employer taxes, etc.)

Dissolution and registration is usually a good fit for expats who:

• Own single-member LLCs or multi-member LLCs where all owners are in favor of moving the business
• Plan to set up shop in one of the 23 states that don’t allow domestication
• Want a relatively streamlined process

Merging

Yet another option to move your LLC from one state to another is a merger, which essentially allows you to set up an LLC in your new state that “absorbs” the one from your old state.  

• Draft a plan for the merger
  • Note: This document can get very complex, so you’ll likely want to work with a business attorney on it
• Vote to approve the plan
• File articles about the merger in your new state

This option is usually best for:

• Multi-member LLCs
• More developed businesses
• Those who don’t mind additional costs & complexity

Foreign registration

The last option we’ll walk through is foreign registration (also known as “foreign qualification”). Registering as a foreign LLC allows you to maintain registration in your current state while doing business in another state.

If you’re moving your LLC from one state to another solely to capitalize on lower taxes or more relaxed regulations, this may not be the best choice. Unlike the options mentioned previously, foreign LLC registration makes you subject to taxes and business regulations in both your home state and your new one.

As a result, it may only be right for expats with a physical business presence or employees in either state.

To register your LLC in another state as a foreign business entity, you’ll typically:  

• Obtain your LLC’s articles of organizations in the business’s home state
• File a Certificate of Authority in your new state
• Register your LLC for tax purposes with your new state’s tax authority

Foreign registration is usually best suited for those who:

• Want to continue operating in their current state
• Earn a significant amount of money in a state with lower tax rates, more relaxed regulations, or tax incentives
• Can afford to pay for the additional registration & annual maintenance fees
• Are willing to navigate the tax & reporting obligations in both states

Other considerations when moving your LLC

Before you commit to moving your LLC from one state to another, keep the following in mind:

• Cost: Moving to a state with lower taxes can help you save money long-term, but there are often fees associated with:
  • Filing to register, dissolve, & merge businesses
  • Drafting documents such as operating agreements & plans of merger
  • Obtaining official documents like certificates of good standing or articles of organization
  • Appointing a registered agent
  • Hiring a tax consultant or business lawyer
  • Annual reports & franchise taxes
• Hurdles to dissolution: If you maintain a physical presence or have employees located in your state, you likely can’t dissolve your business there unless you move it all to your new state.
• Tax residence definitions: Dissolving your business in a given state doesn’t automatically mean you are no longer a tax resident. Each state classifies tax residence a bit differently, but you may still meet the definition of tax residence in your former state even after dissolving your business if:
  • Your previous state was a sticky state
  • You maintain a home, own property, or keep your belongings there
  • You have significant social, economic, or familial ties there
  • You maintain official documents & registrations there (e.g. driver’s license, car registration, pet licenses, mailing address)
• Tax implications: You’ll have to navigate new tax & reporting obligations in your new state — plus your old state if you maintain LLC registration there

Identify the right strategy for your business

Moving an LLC from one state to another may lower expats’ tax bills or annual maintenance fees, but it’s not right for everyone. Given the significant tax implications, you should always consult a tax professional before changing your state registration.

And if you do decide to move your LLC to another state, you may need or want a business lawyer to help with the process.

Resources:

1. Best States To Form An LLC In 2024
2. State Corporate Income Tax Rates and Brackets, 2024
3. How Much Does an LLC Cost by State (2024 Guide)
4. Moving Out? Here’s How to Transfer Your LLC to Another State
5. 7 Steps to Dissolving an LLC
6. How to Start an LLC