How to move a small business out of Arizona

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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 Arizona 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 small business out of Arizona without breaking contracts, bank accounts, or momentum

For many owners, the practical question is not whether relocation is possible, but how to move a small business out of Arizona while preserving continuity. In my experience as an attorney and CPA, the most expensive errors occur when business owners treat a change of state as a simple administrative update, only to discover—after the fact—that they have triggered avoidable tax exposure, disrupted contracts, or created dual compliance obligations.

When the objective is to relocate the company’s legal “home state,” the superior mechanism is typically redomestication (also called statutory conversion), as described by Cummings & Cummings Law. Redomestication is designed to move the entity itself—rather than replacing it—so the business can usually keep its FEIN, its contracts, and, in most cases, its name. To begin, review how to move a small business out of Arizona via redomestication and confirm whether your entity qualifies.

Although every situation must be evaluated on its own facts, a properly executed move can reduce administrative friction, clarify governance, and position the business for long-term growth. The key is to implement a method that aligns the legal, tax, and operational realities of the company with the state in which it will actually operate going forward.

Why many owners choose to exit the Arizona tax environment and compliance footprint

Owners often ask why an Arizona entity cannot simply “operate somewhere else” and leave the original structure intact. The problem is that the former state may still require annual reports, fees, registered-agent maintenance, and other obligations that continue indefinitely if the company remains domiciled there. In other words, the business can move physically, but the entity’s legal domicile can keep the company tethered to Arizona’s compliance orbit.

Accordingly, part of how to move a small business out of Arizona is understanding that state-level obligations tend to follow legal domicile, not merely the location of customers or employees. A well-planned relocation aims to reduce unnecessary filings and minimize the risk of accidental noncompliance that can lead to penalties, administrative dissolution, or loss of good standing—each of which can create downstream banking, contracting, and licensing issues.

From a strategic perspective, owners also seek predictability. They want a cleaner compliance profile, fewer moving parts, and a structure that supports growth without recurrent “fix-it” legal projects. This is precisely why redomestication is frequently the preferred solution: it changes domicile while preserving the entity’s continuity.

Why redomestication is the best mechanism for moving an existing Arizona entity

If the goal is to change the entity’s “home state,” redomestication is commonly the most efficient and least disruptive approach because it is structured to preserve the company’s identity. Properly executed, it allows the company to keep operating during the transition rather than forcing the business to pause operations while a new entity is created and assets are migrated. That operational continuity is not a luxury; it is often essential for payroll, merchant services, leases, and vendor relationships.

Critically, redomestication is preferred because it is designed to maintain the company’s existing FEIN, preserve contracts, and protect credit history. In practice, that means you are typically not re-papering the business from scratch, and you are not forced to explain to counterparties why the “old company” no longer exists. For owners evaluating how to move a small business out of Arizona, this is the central distinction: redomestication moves the entity; it does not replace it.

To proceed with a compliant plan, owners should review how to move an Arizona small business to a new state through redomestication and confirm the sequence of filings, signature requirements, and post-approval obligations. The process is straightforward when handled correctly, but it should not be improvised.

Common misconceptions that lead businesses to choose the wrong transaction

A frequent misconception is that foreign registration in a new state accomplishes a “move.” Foreign registration often does the opposite: it can create dual-state compliance, requiring the company to maintain good standing, registered agents, annual renewals, and related obligations in both states. For a company that has permanently relocated operations, this can become a recurring expense and an unnecessary administrative burden.

Another misconception is that dissolving the Arizona entity and forming a new company elsewhere is “cleaner.” Dissolution is not a neutral act; it can interrupt contract continuity, complicate banking relationships, and create practical problems with licensing, insurance, and vendor onboarding. Moreover, owners are often surprised to learn how much time is consumed by re-titling assets, re-documenting agreements, and re-establishing the business with counterparties.

When advising on how to move a small business out of Arizona, I emphasize that the “simplest” approach on paper can be the most expensive in reality. The superior approach is typically the one that preserves the business’s legal identity and reduces avoidable friction—precisely what redomestication is intended to accomplish.

Practical legal and procedural issues to address before you relocate

Even when the mechanism is correct, execution matters. Owners should confirm the entity’s current status (including good standing), identify whether member, manager, director, or shareholder approvals are required, and ensure governing documents align with the contemplated conversion. In addition, you should anticipate the procedural sequence: filings in the destination state, filings in Arizona as applicable, and careful coordination to avoid gaps that could jeopardize continuity.

Owners should also inventory the company’s contract and compliance touchpoints. Examples include: customer agreements with change-of-control or assignment provisions; commercial leases that require landlord consent for certain entity changes; lender covenants tied to the borrower’s legal status; professional licenses that must be updated; and insurance policies that may require endorsement. Understanding how to move a small business out of Arizona means addressing these issues proactively rather than reacting to them after a counterparty flags a discrepancy.

Finally, it is prudent to plan post-move housekeeping: updating registered agents, aligning the principal office address, confirming the company’s name availability in the destination state, and implementing a clear compliance calendar. These steps are not optional; they are the practical safeguards that keep the redomestication from becoming a “paper win” that fails operationally.

A clear, continuity-preserving path forward

For owners who have permanently relocated operations, the most defensible approach is typically to align legal domicile with operational reality. When evaluating how to move a small business out of Arizona, the measure of success is not merely obtaining an approval stamp; it is achieving a transition that preserves the company’s contracts, banking, and identity while reducing unnecessary ongoing burdens.

Redomestication is specifically engineered to accomplish that objective. It is commonly faster and more cost-effective than a merger, and it avoids the long-term drag of maintaining a foreign registration in Arizona. Most importantly, it is structured to preserve continuity—FEIN, contracts, credit history, and, in most cases, the company’s name—without the disruption associated with forming a new entity and transferring assets.

To take the next step, consult how to move a small business out of Arizona using redomestication and ensure the process is handled with the precision it requires. When properly implemented, redomestication provides the cleanest transition for owners who want to exit Arizona’s business environment while keeping the company itself intact.

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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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