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Making the Move
Considerations when relocating your company.
By Cleve Clinton
If you are considering moving your company from another state to jobs-friendly Texas, here are some of the most important legal considerations that might affect such a relocation.
Company Entity—You have three options when it comes
to classifying, structuring, and operating your company:
1. Continue—You can maintain your company in the state where it
was formed and register as a foreign entity doing business in Texas,
undertaking foreign qualification. However, if you keep both entities,
you will pay duplicative annual report and/or franchise taxes, and tax
filings can sometimes be complicated for the entity and its owners. If
you incorporated in Delaware or Nevada, you were probably foreign
qualified in your current state. You can eliminate your current state
and register as a foreign entity in Texas.
2.
Liquidate—You can liquidate your company in the old state and form
a new entity in Texas. This may result in federal tax issues if you have
a C corporation, which is taxed separately from its owners, but this is
unlikely if you have a limited liability company. For any corporate
entity, there are state-mandated formalities if you dissolve your
business, depending upon the state where this is done, often requiring
document preparation (dissolution papers) as well as filing and paying
any outstanding taxes and dissolution fees.
3.
Reorganize—You can undergo a reorganization, forming an entity in
Texas and merging the old company into the new. This can be done
entirely tax-free for a C corporation.
Legal Documents
1.
Contracts—Because your legal jurisdiction is now in Texas, it makes
sense for your documents to refer to Texas law. Texas law treats at
least some contract provisions differently. Review and update your legal
documents, both those that deal with your customers and with your
vendors. Many aspects of your employee handbook, whether it is based on
information from the internet or is tailored to suit your company, will
need to be different in Texas. There are many free easy-to-understand
employee handbooks online.
Update Your Address
1.
Federal government—The IRS requires no changes to information such
as your employer ID number, but you must complete Form 8822, Change of
Address (Part II), and designate if you are changing only the mailing
address or are also changing notifications for business income, excise,
employment, and other tax matters.
2.
State government—The Texas Secretary of State requires companies to
register to do business in Texas, which will perhaps necessitate
amending documents, like the articles of incorporation for a corporation
or the articles of organization for a limited liability company, and
notification of any address change. If you elect to be organized in one
state and registered to do business in another, you must maintain
registered agents in each state and complete each state’s filing and
reporting requirements.
3.
Marketing materials—Update your website, email marketing templates,
email signature, business cards, and social media accounts.
4.
Online—Change your physical address as listed on your website,
Google Places, Yelp, Bing Places, and any other search engines you’ve
registered your business with.
5.
Automatic payment accounts—When your address changes at your credit
card company or bank, all online auto-charges to your business credit
card will stop until the address is updated.
Becoming a Texan
1. Wills and estates—Because Texas is a community property
state, the law affects your current estate plans very differently. It
may also impact your legal rights and obligations in other life changes,
such as a divorce and your children becoming adults since your last will
update.
2.
Texas driver’s license and vehicle registration—Update your local
address within 30 days of your move.
3.
Voter registration—Notify the county voter registrar.
4.
Insurance and credit cards—Notify your agent and issuer.
5.
Safe-deposit box—Have you inventoried or updated your safe-deposit
documents lately?
If you are moving your business across the United States, it’s time to
check up on your company structure, your contracts, your internet
presence, and the records affecting rights and privileges in your
personal life.TBJ
This article was previously published on tiltingthe scales.com. It
has been edited and is reprinted with permission.
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CLEVE CLINTON a shareholder in Gray Reed & McGraw, is certified in civil trial law by the Texas Board of Legal Specialization. He has an affinity for closely held businesses and their principals—risk takers who plan big, dare big, and often find themselves in big trouble. Clinton offers practical insights and a little humor on his business law blog, tiltingthescales.com. |
