How to Change the State of Incorporation

Corporations have several options when it comes to expanding to new locations or relocating the home base. The state in which the corporation chooses to incorporate is known as its home base, or "domicile." The corporation is considered a citizen of that state. It is relatively easy to obtain the authority to operate in other states as a foreign corporation, while changing the domicile is a more complicated procedure.

Foreign Corporation

If you are interested in registering your business in a different state, one option is to maintain the corporation's state of domicile, and to simply register as a foreign corporation in a different state. The business' state of incorporation will not change, but you will be allowed to do business in the additional state where you register as a foreign corporation. The procedure for registering as a foreign corporation differs by state. Generally, states require corporations to submit the articles of incorporation and a certificate of good standing from the domicile state to the new state's business registrar. In most cases, the forms must be accompanied by a filing fee.

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Domestication

Some states allow corporations operating as a "foreign" corporation to then "domesticate," or change its state of incorporation to the host state. Through domestication, corporations do not have to dissolve and re-form in the new state, but instead the business may jump jurisdictions. As such, the corporation maintains its age and history as an alternative to reappearing as a completely new business. In order to make such a major change to the business, the decision to change the state of incorporation must be approved by the board of directors and the shareholders. In states where it is permitted, the domestication procedure usually involves filing the articles of incorporation, certificate of domestication and a filing fee with the business registrar.

Reincorporation

If the shareholders decide to move the corporation's domicile to a state that does not have a domestication statute, you must dissolve the corporation in the current state and re-form it in the new state. The newly formed corporation is a new legal entity, even though it may have the same name and owners as the old corporation. You may have to obtain a new employer identification number, corporate bank accounts and financing. Relocation might bring tax consequences for the business and might affect employee benefits.

Relocation Procedure

Reincorporation involves dissolving the business in the old state and incorporating the business in the new state. To dissolve the business, most states require corporations to file dissolution documents with the state business registrar, and cancel all licenses and permits. You must distribute final paychecks, submit final tax returns, and notify creditors and customers of the move.Once in the new location, most states require new businesses to file articles of incorporation with the state business registrar. You should also check with the new state and local governments to find out if the corporation is responsible for any additional permitting or tax registration.

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