by Kathy Tremmel, Business Attorney
Sometimes it is necessary to relocate your business. The business climate concerning regulations, taxes and incentives may be friendlier to your business in Texas than in your current state.
Sole proprietorships and partnerships can move easily. Usually all that is required is to file an assumed name certificate or DBA (“doing business as”) in Texas.
Moving an entity, such as a corporation or a limited liability company (LLC), to Texas is more involved. You may decide to continue operations in your existing state and simply register as a foreign entity in Texas. Another option is to terminate your business in your existing state and form a new business in Texas. However, for continuity reasons, many business owners prefer to convert their existing businesses to Texas businesses. Which option you choose depends on the up-front and on-going costs as well as the legal hassles involved.
Not all jurisdictions permit conversions. For a cross-jurisdiction conversion to be effective both jurisdictions must permit the transaction and you must comply with the conversion laws in both states. The process is a little tricky and involves coordinating various filings in the existing state and in Texas.
In order to proceed with a conversion, the business’s name must be available in Texas. You will need to adopt a Plan of Conversion, which authorizes moving the business from the current state to Texas, and make several filings, both in your existing state and in Texas.
If your business is currently registered as a foreign entity in Texas and you decide to convert to a Texas entity, you are still required to follow the rules for conversion. Once the conversion is complete, the foreign entity registration in Texas is automatically withdrawn.
Article and information is courtesy of Kathy Tremmel, Business Attorney at Tremmel Law, PLLC. Amplify Credit Union does not endorse or guarantee the perspectives, the advice, the users, the businesses, or the products or services sold by any users or businesses that appear in this article.