How to move a corporation out of Delaware

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The Redomestication Process in a Nutshell

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3. We submit the legal filings to the states.

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1-3 months

4. Approved! ✅

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Did you know? The average business that moves to a state without state-level income tax saves over $12,500 in taxes per year.

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Redomestication, also known as redomiciling, refers to the lesser-known legal process of transferring or moving the "home state" of an existing Corporation, partnership, or LLC, from Delaware to a new state. It means keeping your existing company name, credit, and federal employer identification number (FEIN) without wasting time and money creating a new business entity, applying for foreign registration, or moving assets between companies.
— Prof. Chad D. Cummings, Esq., CPA

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How to move a corporation out of Delaware: the strategically correct starting point

When business owners ask how to move a corporation out of Delaware, the first question I address is not “Can it be done?” but rather “How can it be done without disrupting operations, contracts, banking, and tax compliance?” In practice, the most costly errors occur when a company selects a transaction structure before identifying the specific legal and accounting objectives—continuity of the entity, preservation of the federal employer identification number (FEIN), and avoidance of unnecessary filings in multiple states.

Redomestication™ (i.e., statutory conversion, as defined by our firm) is designed precisely for this purpose: it changes the corporation’s “home state” while preserving corporate continuity. For companies that have truly outgrown Delaware’s legal environment, fee structure, or compliance posture, guidance on how to move a corporation out of Delaware through redomestication™ is the correct place to begin, because the process is built to reduce disruption rather than to create it.

Properly executed, a Delaware exit should look boring from the outside: customers continue paying invoices, vendors keep shipping, employees remain paid, and the company does not “start over” in the eyes of banks and counterparties. That is the operational hallmark of a sound redomestication strategy, and it is also why professional planning matters—especially where the company’s contracts, credit profile, and compliance calendar were built around the existing Delaware entity.

Why businesses decide to move out of Delaware: taxes, filings, and friction

Companies commonly revisit Delaware after the initial formation phase, when the reality of ongoing franchise taxes, registered agent fees, annual reporting, and administrative overhead becomes more tangible than the theoretical benefits of Delaware incorporation. For many closely held operating companies, Delaware can become less a strategic advantage and more a recurring cost center—particularly where the company’s owners, employees, and operations are no longer connected to Delaware in a meaningful way.

From a compliance perspective, the Delaware legal system can also feel misaligned with the needs of a small or mid-sized operating company that wants practical resolution over prolonged legal complexity. Businesses frequently report that what they need is not “the most sophisticated corporate forum,” but rather a predictable and efficient legal environment where their day-to-day operating reality is reflected in local rules, procedures, and expectations.

Accordingly, when evaluating how to move a corporation out of Delaware, it is prudent to examine the full lifecycle cost of remaining: annual state obligations, potential dual-state compliance if the company has effectively moved elsewhere, and the time burden imposed on internal staff and external advisors. A well-planned redomestication™ can address these friction points in a single integrated transaction rather than through piecemeal fixes.

Redomestication™ is the preferred mechanism for leaving Delaware without corporate “amnesia”

In my experience as both an attorney and a CPA, the principal goal of any relocation strategy is continuity. Redomestication™ is superior because it is structured to preserve the legal identity of the corporation while changing its domicile. That distinction is not academic; it directly affects whether the company can continue operating under existing contracts, maintain banking relationships without re-underwriting, and avoid confusion with vendors who rely on consistent entity information.

Most importantly, redomestication™ is designed to allow the corporation to keep its existing FEIN. That single feature often determines whether the transition is administratively efficient or administratively punishing. Changing FEINs can cascade into payroll system revisions, vendor onboarding updates, customer master-file changes, and mismatched tax reporting—none of which creates value for the business.

For owners focused on how to move a corporation out of Delaware while minimizing operational risk, how to move a Delaware corporation to a new state via redomestication™ is the approach that aligns legal mechanics with real-world business continuity. It is the cleanest path when the objective is a true change of domicile—not a temporary workaround.

Key benefit: preserving contracts, licensing, and brand continuity

A common misconception is that “moving” a corporation necessarily means forming a new entity and transferring everything over. That is precisely the method that creates avoidable friction: contract assignments that require counterparty consent, amendments to financing documents, and potential disputes over whether a “new” company has the same rights and obligations as the “old” one. When a company operates at scale—even modest scale—these issues are not theoretical; they become immediate project management liabilities.

Redomestication™ is intended to avoid that corporate reset. In most cases, the corporation can maintain its existing contracts because the company itself remains the company; the “home state” changes, but the entity’s continuity is preserved. Likewise, the corporation’s name can often be maintained, protecting the brand equity that has been built through market presence and search engine optimization.

Accordingly, when analyzing how to move a corporation out of Delaware, the conversation should center on minimizing contract renegotiations and avoiding the operational downtime associated with “starting over.” For decision-makers who value continuity, the proper way to move a corporation out of Delaware using redomestication™ is to prioritize legal structure that preserves existing relationships rather than forcing assignments, novations, or mass paperwork.

Misconceptions that cause expensive mistakes when relocating out of Delaware

One of the most frequent errors is assuming that foreign registration in the new state is the same as “moving.” It is not. Foreign registration generally leaves the corporation domiciled in Delaware while merely authorizing it to transact business elsewhere. In practical terms, that frequently means the company remains responsible for Delaware obligations while also taking on new compliance requirements in the destination state. The result is often dual filings, dual fees, and an expanded administrative footprint.

Another recurring mistake is defaulting to a merger structure because it appears familiar or because a template transaction is easy to describe. Mergers can be appropriate in certain contexts; however, they can also introduce unnecessary complexity, higher legal fees, and heightened risk of unintended tax or contractual consequences when used as a substitute for a straightforward domicile change. If the business objective is simply relocation, the transaction should not be engineered like a reorganization unless there is a compelling reason.

Finally, some owners consider dissolution and re-formation. This is often the most disruptive path: it can interrupt continuity, invite contractual disputes, complicate banking and licensing, and increase the risk of compliance gaps. A corporation exploring how to move out of Delaware should treat dissolution as a last resort, not the default plan, because it is fundamentally different from a continuity-preserving redomestication™.

Procedural considerations: planning the move to minimize tax and compliance exposure

Successfully executing how to move a corporation out of Delaware requires more than filing forms; it requires coordination. The corporation must evaluate (i) where it is truly operating, (ii) whether it has “nexus” that triggers tax or reporting obligations, and (iii) how to align corporate governance documents, ownership records, and state filings so that the move is internally consistent and defensible. A relocation that is not properly documented can create downstream issues in audits, financing diligence, or investor reviews.

From an accounting standpoint, the goal is to avoid creating new tax reporting profiles when they are not necessary. Maintaining the FEIN is a key part of reducing tax administration friction. Equally important is aligning state registrations and withdrawal/termination steps so that the company does not inadvertently continue accruing obligations in Delaware after its business has clearly moved elsewhere.

For that reason, owners should approach how to move a corporation out of Delaware as a controlled legal project with a defined start date, filing timeline, and compliance checklist. A well-run redomestication™ is designed to deliver a clean transition: the corporation’s operations continue uninterrupted, while the legal domicile and ongoing state obligations shift to match where the business is actually based.

Conclusion: the most efficient way to move out of Delaware is the method that preserves what you have built

For most operating businesses, the central question is not whether Delaware is “good” or “bad,” but whether Delaware continues to be the most cost-effective and practical home for the company. When it is not, a properly structured redomestication™ offers an efficient mechanism to change domicile while preserving the company’s existing identity, operational stability, and administrative continuity.

In particular, companies evaluating how to move a corporation out of Delaware should prioritize solutions that preserve contracts, maintain the FEIN, and minimize the need to re-paper relationships with banks, vendors, and customers. Those features are not conveniences; they are the difference between a seamless transition and months of remedial work.

To proceed with confidence, review how to move a corporation out of Delaware through redomestication™ with Cummings & Cummings Law and ensure the transaction is handled in a manner consistent with both legal requirements and the realities of tax and operational compliance.

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Domestication vs. Foreign Registration vs. Merger vs. Dissolution: A Comparison

Domestication is, in many circumstances, far preferable to registering an LLC or corporation as a foreign entity, especially where the LLC or corporation has permanently moved its operations and will not be returning to the prior state in the near future.

Some attorneys, unfortunately, confuse their clients by recommending a foreign entity registration in the new state, or worse, a merger, where a redomestication™ would have accomplished the goals of moving their business to a new state efficiently and effectively.

The top seven benefits of moving your company (LLC, corporation, or partnership) to a new state via redomestication™ to transfer your business include:

1. Maintaining your existing federal employer identification number, eliminating the tax headaches of forming a new company or transferring assets between companies (and inadvertently triggering a hefty tax bill from the IRS) when you move your business to a new state;
2. Keeping your existing business credit history and track record, safeguarding your reputation with clients, vendors, and creditors when moving your LLC or corporation to a new state;
3. Continuing your existing business name (in almost every case), protecting your most important assets when moving your company to a new state: your brand, reputation, and time you have already invested in search engine optimization;
4. Maintaining your existing contracts with customers and vendors because moving your business to a new state via redomestication™ does not create a new company: it maintains your existing company, saving you dozens (or even hundreds) of hours re-writing (and re-negotiating) contracts and changing banks;
5. Eliminating the need to continue paying registration fees and taxes in your prior state (assuming you have discontinued your operations there and have permanently relocated to a new state), potentially saving you tens of thousands of dollars (or more) in state taxes every quarter when you move your business to a new state;
6. Avoiding unnecessary IRS scrutiny because moving your LLC or corporation to a new state via redomestication™ is a tax-free transaction under the Internal Revenue Code; and
7. Reducing the amount of time you spend on administrative filings, saving you untold hours annually, by moving your company to a new state.

Before taking the "penny wise and pound foolish" approach of foreign entity registration or spending countless hours and exorbitant legal fees (and possibly taxes) on a merger or merger-gone-wrong to move your company to a new state, ensure you understand your options.

In most circumstances, redomestication™ (and not a foreign entity registration or costly and complicated merger) is the best route to achieve a change in company domicile to a new state.

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