Moving Your Business Entity To Nevada
There are a lot of benefits to being a small business owner. One of them is the freedom and flexibility to do business wherever you choose. Nevada is one of the best locations to form a business entity because of the many advantages business owners are able to take advantage of. However, if you already have a business and are looking to move it to Nevada, you may have to do some extra research before beginning the move. Here’s some information to help you when relocating your business.
Sole Proprietorships (and/or Partnerships)
Moving a Sole Proprietorship or Partnership is very simple. You’ll need to register your business using a Fictitious Firm Name or “Doing Business As” (DBA) with the County Clerk of each county where business is being conducted, in Nevada.
Limited Liability Companies (LLCs)
You may have limited options for moving your LLC, depending on what state you are moving from. Consider talking to an attorney in the home state or talk to a business lawyer in Nevada that will be able to give you all of your relocation options. Below are some options to keep in mind for moving your business to Nevada.
1. Registering as a Foreign LLC. When you register as a Foreign LLC in Nevada you will be able to continue your LLC in the previous state. This also means you’ll be required to file multiple annual reports for taxes and can be more complex if the entity is a multi-member LLC. This is recommended for business that know they will move back to their home state at some point down the road or want to do business in both states. However, it can also be the most expensive option for a business owner.
2. Dissolving the home LLC and establishing a new Nevada LLC. There are often no tax consequences when taking this route. However, any debts and / or assets of the original entity may need to be transferred, causing a potentially taxable event. Further, you will have to get a new tax ID number and establish a new business account and credit when you open up the Nevada LLC. This may be the most reasonable option if your home state does not allow LLCs to domesticate to another state.
3. Domesticate your Entity in Nevada. Below are some states that will currently allow you to domicile out and domesticate in Nevada.
Arizona
Colorado
Delaware
District of Columbia
Florida
Idaho
Indiana
Kansas
Kentucky
Louisiana
Massachusetts
Maine
Mississippi
Nebraska
New Hampshire
New Jersey
Nevada
Pennsylvania
South Carolina
South Dakota
Texas
Utah
Virginia
Washington
Wisconsin
Wyoming
Some states, like New York, will not allow you to domesticate in any state. While others, like Illinois, just recently passed domestication laws what will help some entities domesticate in and out of their state. Consult with a local business attorney to find out if this is an option for your business in Nevada.
Domestication may be the easiest and best way to relocate your LLC to Nevada, especially if you believe the move to be permanent. If the home state allows it, you have two option when domesticating your entity in Nevada. The first is transferring membership interest to the ownership of the Nevada LLC. The second is merging your previous LLC into your new LLC. “You can keep your EIN and won’t face any tax consequences if all members still have 50% interest in the capital and profits of the new LLC.”(1)
Corporations
Moving a corporation to Nevada is similar to the process of moving an LLC. However, keep in mind that there are different tax consequences for corporations. Here are your options:
1. Operate in both the home state and Nevada. This results in more paperwork and fees for both states.
2. Dissolve the home entity and form a new corporation in Nevada. We would suggest talking to a CPA since there are tax disadvantages with this option. This may also affect your employee’s retirement plans.
3. Register a new corporation and merge the entities. This is generally the most recommended as it allows a tax-free restructuring of the corporation.
Moving an entity can be daunting, especially when settling into a new home state. Depending on what state you’ll be moving your entity from, you may or may not be able to begin this new chapter of your business as easy as you think. However, moving to a state like Nevada can have numerous advantages for your business. Make sure to consult with a Nevada business attorney to see what options are available for moving your business entity to Nevada.
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(1) https://www.sba.gov/blogs/how-move-your-sole-proprietorship-llc-or-corporation-new-state
