How to Move a Sole Proprietorship Business From One State to Another

by Lee Roberts
Moving your sole proprietorship does not have to be a burdensome experience.

Moving your sole proprietorship does not have to be a burdensome experience.

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As a sole proprietor, you are the owner and operator of the business. Many factors contribute to where you choose to locate your business. Common reasons for choosing one state over another are convenient travel between work and home, more favorable tax rates or too many other similar businesses in your first location. If you begin business in one state, the conditions guiding your choice may change, or you may reevaluate your initial choices and decide you will fare better in another state.

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Business Relationships

Preserve the integrity of the business relationships you have established. Regardless of whether you continue working with these same individuals and companies, their impressions of how you conduct business contribute to your reputation and goodwill. If you are ending the relationship, it is the last time you can make a positive impression. Wrap up your relationships in a professional manner by providing timely notice of your intent to move. Provide your new contact information and date you will resume business in your new location.

Professional Obligations

Contact the agency that provided your professional license to learn the specific procedures that you need to follow for your move. For example, someone licensed by New York State in the insurance industry may only need to change her status from a resident to a non-resident, rather than forfeit her license. Additionally, an educator moving to Massachusetts would benefit from maintaining his license if applying for a temporary one based on the valid, out-of-state license. No matter what the circumstances, the licensee will need to comply with any additional applications or testing dictated by the new state.

Tax Considerations

If the state tax authority granted you a license to collect sales and use taxes, you must comply with their procedures to surrender your permit and settle your account. Some states establish a specific date or time period to pay your bill based on when you stop doing business in their jurisdiction. For example, New York State requires businesses to file a final sales tax return within 20 days after they cease business operations in the state. Other states, such as California, have adopted a slightly different approach and allow sole proprietors to file their final returns on their regular monthly or quarterly due date. You must apply for a permit in the state you are moving to before you may begin collecting taxes again.

Abandoning an Assumed Name

If you registered an assumed name, follow the instructions on the registration form to learn if you need to file a certificate to abandon your name. Some states refer to assumed names as fictitious names, d/b/a or "doing business as." For example, Texas requires sole proprietors to complete an Abandonment of Assumed Name Certificate when the proprietor ceases to transact business or render services under their assumed name. Alternatively, some states presume you have abandoned your name if you do not renew it when it expires.

Continuing or Adopting an Assumed Name

It is your choice whether to use an assumed name in the new state. Another business may try to block you from using the fictitious name you used in the first state. Consider legal, financial and marketing factors when deciding whether to keep your assumed name. You always have the option of using your legal or given name as the name of your sole proprietorship. It is prudent to begin investigating possible name choices before you relocate. If you change your name, you can provide the new name to your current contacts.