When you look at relocating your business to another state, you have several issues to consider beyond ordering new business cards and sending out change of address postcards to your customers and vendors.

If your business operates as a registered legal entity, such as a corporation or a limited liability company, it is linked to the state where it was formed. If you want to do business in a different state, your business will need to seek authorization from the new state. Three options are available.

Expansion Plans

First, you can maintain the original business entity in the state of formation and seek foreign qualification of that entity in the new state.

This is accomplished by filing the correct documentation, providing proof of existence in the state of formation and paying a filing fee. The original entity continues to exist in the state of formation, and the new state grants permission for the entity to operate within its borders.

The main advantage is that there is one entity, with one tax ID, so you only have to file one federal tax return. Your business will need to file state tax returns in both states, however, and track the levels of business activity in each state.

For example, business owners who live in one state but move their business to another are still connected to their state of residence.

For those with entities formed in remote states like Delaware or New Jersey, foreign registration is required in the state in which the business is actually engaged in commercial activity.

This approach applies to expansion situations, as well as where a connection to the original state is maintained.

Separate Businesses

You can maintain your original business entity and form a new corporation or LLC in the new state, operating it as a separate business. The new entity will have its own identity for legal and tax purposes.

Both entities could be owned by the same owners, or the new entity could be owned by the original entity as a subsidiary. You will need to file separate federal and state tax returns for each entity.

This approach may be appropriate when the move involves expansion and the business maintains activity in the original state. For example, a restaurant that adds a location in a second state may want to operate separately to meet liquor license requirements or simply to avoid linking the new location to the old.

Leaving the Old State Behind

If the relocation is permanent and no further activity is planned within the original state of formation, then you can form a new entity in the new state and the original entity can be dissolved.

This new entity will be legally separate from the original company. While some duplication of effort may be incurred during the transition period, once the original entity is dissolved the new business will only need to file taxes federally and in the new state where it operates. This approach forfeits any continuity of the legal entity, which may have positive or negative implications depending upon the situation.

In all three scenarios, local business licenses and state-level registration for tax and unemployment must be established. Your business will need a resident agent for each state in which it is registered.

The new state may also have requirements for registration of fictitious names. For businesses that possess occupational licensing or registration with federal agencies and certification as a women-, minority- or veteran-owned business enterprise, it may be critical to maintain the original entity so as not to lose that standing.

Relocation to a new state can greatly impact a business in many ways. If you’re considering a move, you should discuss your plans with an attorney before making the move.