Relocating an Entity from One State to Another
As long as Nevada remains a business friendly state, we will continue to get calls from clients interested in moving their companies to our state. It’s not the simplest process, but it’s definitely possible. I’d encourage anyone to first consult with a CPA first, to review the tax consequences, but from the legal perspective, here’s how the process should go:
1. Form a NV Corporation or LLC, depending on which makes the most sense.
2. Transfer the assets and accounts from the out-of-state entity into the NV entity, including bank accounts, lines of credit, leases, vendor agreements, customer accounts, merchant accounts, etc.
3. Once the out-of-state entity is basically an empty shell, dissolve it.
While it may seem strange to have two active entities, there are a few reasons why you would form a NV corporation before you dissolve your out-of-state entity.
First, most states’ statutes require a “winding up” of a corporation prior to filing dissolution paperwork. “Winding up” involves paying off or otherwise transferring all debts, liquidating or otherwise conveying all assets, and leaving the entity an empty shell.
Second, because your business is going to be operating during this process, you don’t want there to be a moment in time during which you were not operating under an entity.
Third, it makes transfer of accounts simpler when they’re going from one entity to another rather than to an individual and then eventually to another entity. You want to make sure no accounts fall through the cracks.
Contrary to popular belief, Articles of Conversion do not accomplish this task. They are only for transactions involving entities that are each incorporated in Nevada.