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A reader asks:
If a business is registered in one state, and the owner of the LLC moves to another state, does the LLC need to be reestablished in the new state?
We passed the question on to Doug Collom, vice dean of Wharton San Francisco, where he runs the business school’s West Coast operations and serves as an adjunct professor, teaching a class on startups and venture capital. Here’s his answer:
An LLC, like any corporation (such as the usual Subchapter C corporation), can serve as the form of business entity in any state. If the business operations being run out of the LLC should expand, or if the LLC members want to take the business to a different state than the one where the LLC is organized, as a general premise there is no requirement to reincorporate. Depending on the kinds of activities that the business is conducting in its new location, it may be necessary to qualify with the secretary of state’s office of that state, as well as that state’s franchise tax authority, in order to conduct business there. But the original “situs” of incorporation will be respected, and there will be no requirement to reincorporate.
That being said, depending on the kind of business that is expanding or relocating, it would be a good idea to check out in advance the laws of each state that may pertain to the business. This may influence the decision on how or whether to conduct business in that state.
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