So if you are considering moving your company from California to Texas, how is it done?
Like most things it will probably be easier if broken down into steps.
Step 1 – Where are you Legally Formed? The first step is to assess where things stand currently. Many business owners form a company in the state they start operations. So many businesses operating in California are California entities, in the form of LLCs (limited liability companies), corporations or limited partnerships. However, some entities are formed in other states, like Delaware.
We’ve even seen cases where an owner was planning an eventual move to Texas and formed their company in Texas in anticipation.
Step 2 – Where are you Operating? Another step is to figure out where your operations are? Where are the employees? Where is the company physically doing work, whatever the Company’s business might be.
Step 3 – Make a Plan of Transition. Next the business owner needs to plan how to transition from their current place of legal formation and physical operation to where they want to be. This is both a legal process and a management process.
Step 3A – Where Do You Want to Be Legally? Which state should your company be formed in? Common choices include Delaware or the state you are operating in. Please keep an eye out as we may cover this in a future blog.
Step 3B – How Do You Move Your Physical Operations? While mainly an operational and business planning issue, you also need to think about some legal aspects of the physical move. This often means new contracts and agreements with suppliers, employees and customers.
The move is a great time to revisit what you have been doing and make it match your current business.
Step 4 – Execute The Plan of Transition. In an upcoming blog we will discuss the legal side of changing your state of formation.
Step 5 – Wind up or Reduce Your Affairs in California. If part of the purpose of the move was to lower taxation or less regulation you’ll want to lessen or eliminate your ties to California to avoid these issues.
This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity. Each case is unique. Past results do not guarantee future outcomes.
About the Author
R. Shawn McBride — R. Shawn McBride is the Managing Member of The R. Shawn McBride Law Firm, PLLC. Shawn works successful, private business owners in their growth and missions to make a company that stands the test of time. You can reach R. Shawn McBride at firstname.lastname@example.org or (214) 418-0258.
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