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MOVING YOUR BUSINESS LLC OR CORPORATION TO CALIFORNIA
California is one of the top economically successful states in the nation that is also considered as the hub of technology for start-ups. Home to the Silicon Valley, there has been a rise in the number of owners and directors moving corporation to California from other states. Do you want to move your business to “The Golden State”?
Introduction – Why California?
Why move your business to California? The state is economically strong with a Real Gross Domestic Product (GDP) of $2.7 trillion and is home to 49 Fortune 500 companies. The world’s fifth largest economy has most of its economic activity centred along the coast with the Bay Area ranking 19th in the world. There are over 3.5 million small businesses that have access to the two largest seaports in the nation. Most business owners think of moving LLC to California because of the infrastructural support the state provides like one of the most active international cargo airport along with a wide variety of business incentive programs.
The question is – what are the possible benefits or advantages for moving LLC to California? Your business can leverage from the following:
- Tax Credits: One of the biggest benefits of moving corporation to California is that the state offers a wide variety of tax credit programs. Depending on the type of tax credit program and qualification criteria, businesses can enjoy tax credit on areas like qualified wages, qualified expenditures, Community Development, Research, rehabilitation or construction of low-income housing, employment creation, retention of employees, and economic impact of business projects. Some of the popular tax credit programs include New Employment Tax Credit, California Competes Tax Credit also known as “Cal Competes”, and California Research and Development Tax Credit.
- Tax Exemption and Exclusions: If you are moving LLC to California then your business can benefit from the different “Tax Exemption” programs being offered by the state. These exemption programs can be classified according to different industries or areas of business like the Manufacturing and R&D Partial Sales and Use Tax Exemption and the CAEATFA Sales and Use Tax Exclusion. The sales and use tax exemptions are also applied according to categories like Health Related industries or businesses, Housing, Alternate Energy, Food and Food products, Transportation Related Industry, and Entertainment Industry among others.
Steps to Move a Corporation to California
California provides just the perfect platform for businesses but if you are thinking of moving corporation to California then it is important to be aware of the ways you can successfully do so.
The Registration Options
It is important to identify the options for moving Corporation to California. There are 3 options to choose from:
- Register as a Foreign Corporation: If you want to continue your business in the state of formation and at the same time you want to register in California then this is the option. You will be required to register your business as Foreign Corporation pursuant to 2007 California Corporations Code-Chapter 21, Section 2100 – 2117.1.
There can be extensive paperwork as you will have to file Annual Report in your home state and “Statement of Information” in California. You will also be required to file the following documents in order to initiate moving corporation to California:- File an application for registration also known as “Statement and Designation by Foreign Corporation” pursuant to 2007 CA Codes, corp: 2101 and 2105.
- Submit a “Certificate of Good Standing” issued by the government agency in home state
- Mail Submission Cover Sheet
- Dissolve home Corporation and Form New Corporation: If your home state doesn’t allow domestication or conversion then this will be a valid option. Moving corporation to California after dissolving home corporation means that you will have to form a new business entity in the state. It is also important to know that liquidation or dissolving your business entity may lead to income taxes being incurred by the corporation and its shareholders. The documents required to process the incorporation with the California Secretary of State are:
- Depending on the type of Corporation like General Stock Corporation or Professional Corporation, you will have to file “Articles of Incorporation” pursuant to CA Corp Code § 202 (2016).
- Mail Submission Cover Sheet
- Certificate of good standing from California
- Registration of Business Name
- Form a New Corporation in California and Merge Old Corporation: One of the ways of moving corporation to California is through reorganization, which is a tax-free process. Through this process, you can form a new corporation in California and merge your existing or old corporation with the new corporation pursuant to CA Corp Code § 1100 (2016).An agreement of merger has to be approved by the board of both corporations. You will be required to file specific documents to initiate the merger and they are:
- Depending on the type of merger, you will have to submit the Short Form Merger – Certificate of Ownership, Merger By Agreement of Merger, or Triangular Merger
- Mail Submission Cover Sheet
- Certificate of Surrender – for foreign corporations
The documents pertaining to any of the above options can be mailed using regular or express mail, or delivered in person to the office of the Secretary of State, Business Entities Filings. Whatever option you choose, IncParadise can provide guidance and services for moving Corporation to California.
Move Your Corporation to California with IncParadise!
Steps to Move an LLC to California
Moving LLC to California to benefit from the various tax incentives and other business incentive programs is a good decision but how do you move your LLC? Do you need to form a new LLC or can it continue as the existing entity? Let’s take a look at the options offered by the state of California.
The Registration Options
It is important to identify, how you would want to register your business identity. There are 4 options to choose from:
- Register as a Foreign LLC: One of the ways of moving LLC to California is to register your business as a Foreign LLC pursuant to CA Corp Code § 17450-17457 (through 2013 Leg Sess). If you choose this option then you will be able to continue your LLC in your home state while operating as a foreign LLC in California. A foreign LLC is required to file Statement of Information in California and an Annual Report in the home state. A foreign LLC will be required to file the following documents with the California Secretary of State:
- Application to Register a Foreign Limited Liability Company pursuant to CA Corp Code § 17451 (through 2013 Leg Sess)
- A Certificate of Good Standing from an authorized public official from the home state
- Mail Submission Cover Sheet
- Liquidate home LLC and Form New LLC: One of the options for moving LLC to California is liquidating LLC in home state and forming a new LLC in California. The formation of a new LLC is governed by 2012 California Codes, CORP – Corporations Code, Titile 2.5 – Limited Liability Companies. One of the benefits of this option is that dissolving your LLC in home state will not entail any federal tax consequences. The documents required to process the formation with the California Secretary of State are:
- You will have to file “Articles of Organization” pursuant to CA Corp Code § 17051 (through 2013 Leg Sess)
- Mail Submission Cover Sheet
- Registration of Business Name
- Form a New LLC in California and Merge Old LLC: This is another option through which you can maintain your LLC in the home state as well as California. This process of moving LLC to California will require you to form a new LLC in the state and then merge it with your existing LLC. There will be no immediate tax consequences and this merger would be seen as a continuation of the home state LLC. You will be required to file the following documents:
- An approved “Agreement of Merger” pursuant to CA Corp Code § 17551 (through 2013 Leg Sess)
- Certificate of Merger pursuant to CA Corp Code § 17552 (through 2013 Leg Sess)
- Mail Submission Cover Sheet
- Form LLC in California with Members from old LLC: The process of moving LLC to California using this option involves forming a domestic LLC in California, which should have members that contribute membership interests from the LLC registered in the home state.
The documents pertaining to any of the above options can be mailed using regular or expedited mail, or hand delivered to the Secretary of State, Business Entities Filings. Depending on the option you choose, IncParadise can provide guidance and services for moving LLC to California.
Move your LLC to California using Expert Guidance!
Move Your Business to California with IncParadise
Whether you are thinking of moving corporation to California or a Limited Liability Company, the benefits are many including business incentive programs, tax abatement programs, and funds and grants for small businesses. Moving your business entity related to formation, conversion, merger etc., can be a daunting task and even the smallest error can delay business entity registration.
IncParadise one of the top registered agents in California will guide you through the entire process with our knowledge, experience, and commitment so that your LLC or corporation can be formed and become operational quickly.
The process of moving your LLC or Corporation to California can be made easy with us. Our team of professional consultants is here to help you! While the valuation of your business is essential in this process, our partner Eqvista provides a team of certified and well-informed experts to help you with the valuation of your business.