This year, many companies are moving out of California to more business-friendly states – such as Nevada – to flee high taxation and regulation, among other reasons. The good news for these companies is that there are a number of options available to them for making the move, each with its own pros and cons.
Domestication
If you plan on leaving California behind for good and relocating your business to Nevada permanently, domestication is the best choice for you. Domestication works no matter the type of entity your business is organized as, whether it’s an LLC, a partnership, a corporation or something different.
Domestication is a legal process whereby your company will transfer its legal domicile to Nevada. When domestication is complete, California business law will no longer apply to your business – instead, Nevada law will take over and govern any future disputes, regulations and taxation of your company.
In order to domesticate your business entity in Nevada, you’ll have to fill out a document called Articles of Domestication, and file it with Nevada’s Secretary of State. You’ll also have to file your company’s appropriate charter documents, obtain a certificate of good standing from California and pay the associated fees. An experienced business attorney can assist you in drafting and filing these documents with the appropriate offices.
Registering as a foreign entity
This option might work better than domestication if you aren’t sure that you want to stay in Nevada permanently, or if you want to do business in both California and Nevada. It involves registering your business as an out-of-state entity that the Nevada Secretary of State authorizes to do business in the state.
In order to do this, you will have to file a series of documents, including one called Qualification to do Business, with the Nevada Secretary of State and pay the required fees. You will also have to designate a representative for your company that is located in Nevada, so that your company can receive service of process there.
There are many advantages to moving your company to Nevada. Although the process can be quite complex and costly, in the end it could be worth doing.
