How to Change Your Business's State of Incorporation

By Stephanie Kurose, J.D.

How to Change Your Business's State of Incorporation

By Stephanie Kurose, J.D.

As corporations grow and expand, it is often necessary to consider additional locations or even relocating altogether. A corporation's home base is generally the state where it first incorporated, and the corporation is considered a citizen of that state.

It is relatively easy for a corporation to register with other states to conduct business transactions in those states. However, it is more difficult to change the state of incorporation.

Registering to Conduct Business in a Foreign State

If the corporation wants to expand its business into other states, it can register with those states as a foreign corporation. This approach allows the corporation to conduct business within each state it registers with, without having to change its state of incorporation. In this way, the corporation achieves the desired purpose of expansion without having to go through the more formal steps of changing the state of incorporation.

Each state has its own rules for registering as a foreign corporation. However, most states require that the corporation submit its articles of incorporation along with a certificate of good standing from the original state of incorporation. This typically involves relevant filing fees.

Changing the State of Incorporation Without Reincorporating

Depending on the state, a foreign corporation may be allowed to change its state of incorporation to the new state. If state law allows this, a foreign corporation does not have to shut down and form again as a completely new business in the new state. It is able to maintain its current form and structure.

The decision to change the state of incorporation is still very significant. Thus, it may require that the corporation's board of directors and shareholders approve of the move before it can actually take place.

If the change is approved, the new host state generally requires that the corporation file its articles of incorporation and a certificate of good standing along with a filing fee with the relevant state agency. The corporation may need to amend its articles of incorporation to reflect the most recent changes.

If a Corporation Has to Reincorporate

If a state does not allow a foreign corporation to change its state of incorporation to the new state, the corporation must reincorporate. Reincorporation includes dissolving the current corporation and then forming as a new corporation in the new host state.

If the corporation needs to reincorporate, in most instances, it is still able to keep the same name and owners. However, the corporation needs to apply for a new employer identification number (EIN), open up new bank accounts, and obtain new financing.

How to Dissolve and Reincorporate

Most states require a corporation to file dissolution documents when it shuts down in anticipation of reincorporating in the new host state. A corporation needs to pay out its final paychecks, notify its creditors, and file its final tax returns as part of the shutdown process.

The new host state may require the corporation to file new articles of incorporation with the state agency that regulates businesses, usually the Secretary of State. It is also a good idea to check to see what licenses or permits the state requires.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.