What is the best way to reorganize a California LLC into a Texas LLC? by @R44D
Answer by Raad Ahmed:
Transitioning an LLC to a different state offers many options which doesn’t exactly simplify the answer to this question. However, more options organizationally means that you have more opportunity to do what’s in the best interest of your company. Here are a few things you could do:
- Register to do business as a foreign LLC. Truthfully, this option is probably the most complicated as it means that you continue the LLC in California and then also operate an LLC in Texas. Of course this means double the work when it comes to annual reports and taxes.
- Liquidate assets from the current LLC in order to form the new LLC. Some LLC members find this appealing because there aren’t any consequences on the federal tax level.
- Merge new and existing LLCs. This may be a simpler solution since there will be no need to establish a new federal EIN. Additionally, if members continue to own at least 50% interest in the capital profits, then there will be no immediate taxation consequences.
- Form a new LLC. You can do this by having the current members contribute membership interest to the formation of the new LLC.
There are certainly many options to choose from, and ultimately it will depend on how complex you want the transition to be. At any rate, you should consult a business attorney to help you navigate the process.
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