People move their businesses for different reasons. Some do so for economic advantages while others do so because of social reasons. For example, you may find that you have to move your business because your family is moving to another area. Or you may want to change your area of operation because you feel that you’re not getting your preferred return on investment. This overview will look into how you can relocate your company to Texas.
How to move your company to Texas
To move your company to Texas, you will enjoy a wide range of options that we will get into later. Generally, you can choose to continue operating your company in its state of formation or you can completely move it to the new state. We will get into why each of these options might be the best for you, but for now, let’s look at why so many companies have chosen to make the Lone Star state their base of operation.
Why the World’s Best Companies Are Moving to Texas?
Texas is attractive owing to its innovations in tech and biotech. Furthermore, it has grown to be the largest exporting state in the nation, having surpassed several other states, and currently exporting more than 1 billion worth of products and services. It all goes to the efficient transportation infrastructure in the state, which makes this an ideal best for people who deal with large quantities of cargo and commodities. Business owners are also able to find efficient ways to do business by reducing our costs and enjoying a relatively stable tax structure. There are many immigrants in the state who have come here to seek opportunities, making this area quite diverse and adding to its appeal. Additionally, the state is home to many young professionals and has a job market that continues to grow with every day. It also helps that the schools in the area continue to churn out eager professionals and skilled workers.
Which major companies have already moved to Texas?
Some of the major companies that have moved to Texas include Charles Schwab, AT&T, McKesson and PGA of America. Others such as Apple, Facebook, Tesla and Google have expanded their operations to the state, hoping to cash in on the favorable business climate. Other notable companies include:
- Hewlett Packard Enterprises- has a new campus in Houston
- Oracle – moving to Austin
- 8VC- headquarters moving to Austin from Silicon Valley
- FileTrail- moved to Austin
- DZS Inc- moved to Plano
- QuestionPro- moved to Austin
Another reason why so many companies are moving to the state is the current relocation of workers to the Lone Star state. Where workers go companies also follow. It’s expected that this trend will continue as more entrepreneurs move to this region.
Why are Californians so interested in Texas?
One major determinant is the lack of state income tax. For Californians who are coming from an area with a tax rate capped at 13.3%, this offer is quite enticing and pretty hard to refuse. Other than this incentive, Californians also want to work in this thriving job market and to set up shop where the costs of living and operation are relatively low.
What You Need to Know to Move Your Business to Texas?
With the favorable business climate in this region, it’s not a surprise that many business people have made it their home. If you would also like to make the same move, you should be aware of the rules that apply to LLCs and the options available to you.
Register as a Foreign Entity
If you have already registered your business in another state and are looking to expand your operations, this will be a good choice. You will maintain both entities at the same time. Note that by forming a foreign LLC in the new state, you will still be liable for your state of formation’s requirements. That means you have to keep up with taxes and fees for your LLC in the old state as well as in the current state, making you subject to added costs, and increasing your risk of non-compliance. It can get very expensive to maintain two businesses in different regions and this course of action is only advisable where it is unavoidable. Otherwise, if you operate in a state such as California, you will need to keep up with the $800 of privilege tax.
Form a New Entity in Texas
Maintaining two businesses at the same time by keeping the old LLC can be expensive, more so where one region charges hefty fees. If you have the option to completely move your business to another state, starting an entirely new LLC will be the most advisable course of action. You can dissolve your existing business and move to Texas with no ties to the previous governing state’s LLC laws. Please note that dissolving an LLC should take place in a timely manner to avoid falling subject to penalties or facing taxes. For example, if you do not dissolve your old LLC before your tax filing date, you will be liable to that year’s fees.
You can also move your business as it is to another state by getting a permit from your current governing authority, and ensuring that your operations are in line with the new state’s regulations. You will need a plan of conversion and familiarity with the current governing laws.
If a conversion is not available, you can make do with a merger by forming a new company and merging it with your old one in the previous state. When merging two companies, you have to consult your point of contact, your vendors, the bank and the Federal Government. For the LLC to merge into another LLC, you will require a plan of merger where you will detail who is involved and the terms and conditions of the said agreement. Additionally, you will indicate the interest of the current company and how you will change these in regard to the surviving company. As with dissolution, members also have to be in agreement with this plan and will need to approve it based on the operating agreement. Once this stage is over, the members can now file articles of merger which will show the details of the former company, where it was filed and the governing authority of the same.
This is another easy way to go about LLC and corporate relocation to Texas by changing the laws that apply to it. It works best for companies where the owners will have to file several documents in multiple states if they are to move their business. It can also work for a company where the owners feel that the current laws are not compatible with their objectives. Compared to forming a new company or operating as a foreign entity, this method proves to assure owners of business continuity more than the alternatives. Given that the domestication processes are not standard in all regions, it will be best that you check with the state where you wish to conduct business, and understand what you would be liable to. Generally, members will have to draft a plan of conversion which they must approve before filing relevant documents with the original state and new state. Each filing will accompany a fee. For example, if you are moving your LLC company from Florida to Texas, you will be liable to a fee of $600. Once the paperwork is done, you can then draft the formation documents for the domesticated company.
When forming a new company, there are many services that provide this option, alongside representation services. They take away the hassle of the work and allow you to focus on setting up shop while they deal with the paperwork. Moreover, they also handle their compliance side of things and will enable you to understand the current laws, enabling you to navigate the technical as well as legal aspects of business formation.
What are the most popular cities in the state of Texas for company relocation?
While Texas as a whole is an amazing region to set up shop, some cities seem to have caught the eye of corporates and have become a hub for entrepreneurs.
- Dallas: As home to some of the top schools, this city boasts of entrepreneurship and innovation hubs which make it a go-to for young professionals.
- Austin: This city is known for its abundance in professionals and high population of millennials, most of whom work in the Tech industry.
- San Antonio: With more than 1.3 m people living in the city, the job market in this region is thriving.
- Houston: The city boasts of a relatively low cost of living coupled with a stable job market and diversity in its economy.
- El Paso: Entrepreneurs consider this a major economic hub given the number of professionals living in the area and the stability of the job market.
- Tomball: This relatively quiet city has been on the up and up in recent years, providing residents with a break from the hustle and bustle of Houston.