Texas has long been a popular destination for business owners and professionals seeking to relocate. Booming real estate and job markets, a thriving tech industry, and business-friendly tax laws make the Lone Star State an attractive environment for a range of businesses, from tech giants to entrepreneurial start-ups.
When business owners move to Texas, they may want to relocate their business here as well. This will allow them to take advantage of the tax benefits in Texas law. Business owners should proceed cautiously, however, because each state has different rules regarding how to transfer a business across state lines. Here, we will provide an overview of the process for moving businesses from California and New York. These are the two most common states we get calls about.
Transferring an entity from California to Texas
A corporation or a limited liability company (LLC) that originated in California can be converted to a Texas entity. The first step will be to confirm the name availability with the Texas Secretary of State (TSOS). Next, several documents will need to be prepared and filed with the TSOS. These might include a plan of conversion, a certificate of conversion, and a certificate of formation for the new Texas entity. After the initial filings, the business owners must go through a tax clearance process with the Texas comptroller of public accounts.
Once these steps are completed, the transfer must also be filed with the California Secretary of State by preparing and filing a California certificate of conversion. Finally, owners should prepare a company agreement for the new Texas entity and any additional documents appropriate for the circumstances.
Note that there are filing fees associated with these steps, so it is a good idea to be sure everything is done correctly the first time. An experienced business attorney is your best resource for this.
Transferring an entity from New York to Texas
The process for transferring an entity from New York to Texas differs from the California model. Importantly, New York does not allow its entities to convert out of state. There are a few ways to move your business to Texas, and an experienced attorney will be in the best position to analyze the options. One option is to merge a New York entity into an existing Texas entity, or one formed expressly for this purpose.
As with the California model, the first step will be to confirm the name availability with the TSOS, then documents will need to be prepared and filed with the TSOS, including a certificate of formation and a certificate of merger. The business owners must go through a tax clearance process with the Texas comptroller of public accounts. Once the new Texas entity has been formed, the owners should transfer the assets and liabilities of the New York entity to the Texas entity and prepare a company agreement for the new Texas entity. Additional corporate documents may be appropriate depending on the circumstances.
An experienced Texas-based lawyer will be able to guide you through each of these steps. Please call our office if we can be a resource at any point.