A Limited Liability Company, or LLC, is a corporate entity that protects your legal liability when making business decisions. But what happens if you want to move or expand your business to another state? Whether you are relocating and wanting to bring your business with you, or you are looking to operate your business in more states, transferring your LLC might be the answer. There are three methods for transferring your LLC which we will discuss in this article. They are Domestication, Merging, and Dissolution.
In Pennsylvania, Domestication allows for two options. You can either add Pennsylvania as a jurisdiction in which your LLC operates, or you can remove the LLC from Pennsylvania by moving jurisdictions. Either option can allow the LLC to operate in both Pennsylvania and an additional state. The Domestication process can also allow you to operate in several states.
When starting this process, you will need to submit a Statement of Domestication, along with a Domestication Plan to Pennsylvania’s Department of State. You may also need to provide additional documents including:
- A Docking Statement Form,
- Articles of Incorporation,
- A Certificate of Organization,
- A Statement of Registration,
- Tax Clearance Certificates,
- And other optional provisions.
Domestication can be a complex process. It’s important to consult with an experienced business attorney to ensure your LLC can operate in multiple jurisdictions.
Merging is another way to expand your LLC’s reach. Let’s say you want to operate your LLC in both Pennsylvania and New Jersey. Merging means that you would combine your existing Pennsylvania LLC with a new LLC set up in New Jersey. At the end of the process, there will be one LLC with the property and financial obligations from both of the previous Pennsylvania and New Jersey LLCs. Similar to Domestication, you will need to file documentation with the Department of State. When merging LLCs, you will need a Plan of Merger, which will spell out the new terms for your merged LLC. This plan will serve as an agreement between the two companies so they can operate as one.
The third and final method you can use to transfer your LLC is through a process known as Dissolution. At the end of the Dissolution process, your original LLC will cease to exist. If you are choosing this route, you will most likely follow the process of Voluntary Dissolution.
In Pennsylvania, Voluntary Dissolution requires the LLC to “wind up its business” (15 Pa. Cons. Stat. § 8872 (2023)). This basically means you’ll need to tie up any loose ends. This may include paying off your LLC’s debts, finishing active business with clients, and distributing any remaining assets to members. If, when forming your LLC, you did not set up rules for the dissolution, you will follow Pennsylvania’s default rules.
Pennsylvania’s default rules require all LLC members to consent to the dissolution of the LLC for the process to move forward. You must obtain tax clearance certificates from both the Pennsylvania Department of Revenue and Department of Labor and Industry. Lastly, you must file for dissolution by submitting a Certificate of Dissolution to the Pennsylvania Department of State.
While transferring an LLC can be a good way to expand your business, you should be aware that it may come with new tax implications. Different states have different tax laws for things like sales tax, property tax, employment tax, and other relevant fees and requirements. Along with an attorney, you should consult with a tax professional who can explain your financial obligations.
Contact Cornerstone Law Firm for help.
Transferring an LLC can be a complex process. Between the various methods and the rules of different jurisdictions, it can be difficult to know which steps you should take. The business attorneys at Cornerstone Law Firm can help. We’ll help you assess which method is best for your business and work with you to transfer your LLC. Contact us with any questions or to schedule a consultation for transferring your business.