Steps to move a company out of California

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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 California 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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Steps to move a company out of California: why the correct sequence matters

In my experience as both an attorney and a CPA, the steps to move a company out of California are frequently discussed as if they were merely administrative. That assumption is costly. California’s tax environment, regulatory culture, and litigation posture can follow an entity long after the owners believe they have “left,” particularly when the company’s legal domicile remains in California or when exit planning is handled informally.

The most effective approach is to align the legal mechanism with the business objective: a clean change of domicile while preserving operational continuity. For most established LLCs and corporations that have truly relocated, the most reliable way to implement the steps for moving a company out of California is redomestication (statutory conversion), which is specifically designed to transfer the entity’s “home state” without creating a new entity and without disrupting day-to-day operations. To evaluate whether that approach fits your situation, review the steps to move your company out of California through redomestication.

Step 1: identify the business objective behind moving out of California

The first of the steps to move a company out of California is to determine the precise reason for the move. Some businesses need relief from California’s ongoing compliance burden and state tax exposure; others want a more predictable legal environment, improved cost structure, or a better platform for growth. A well-defined objective governs every downstream decision, including how you handle contracts, licensing, payroll, and ownership records.

This step also requires candid assessment of whether the company has, in practical terms, ceased California operations. Many owners mistakenly assume that moving an office or closing a lease automatically ends California obligations. It does not. From a risk-management perspective, the proper steps for moving a company out of California must be structured so the company’s filings, governance, and operational facts point in the same direction.

Where the goal is a durable change in the company’s legal “home state,” the steps to move a company out of California by redomesticating the entity typically provide the cleanest continuity and the clearest narrative to banks, counterparties, and state agencies.

Step 2: choose a relocation method that preserves continuity (and avoids unnecessary reinvention)

Among the steps to move a company out of California, the most consequential is selecting the legal pathway. Business owners commonly compare (i) foreign qualification in the new state, (ii) forming a new entity and transferring assets, (iii) a merger, or (iv) redomestication. The practical question is not simply “Which option works?” but “Which option accomplishes a change of domicile while preserving the company’s identity, history, and operations?”

Redomestication (statutory conversion) is designed for precisely that outcome. It allows the entity to keep its existing contracts, retain its federal employer identification number (FEIN), and, in most cases, preserve its name. By contrast, forming a new entity can force contract assignments, banking changes, vendor re-onboarding, and employee paperwork; mergers can create avoidable complexity; and foreign registration often leaves a continuing footprint in California that undermines the intended exit.

In other words, if your objective is a true move—rather than dual-state compliance—the steps to move your business out of California are best implemented through the redomestication framework described at steps for moving a company out of California via redomestication.

Step 3: protect your contracts, licenses, and business relationships during the move

A frequent misconception is that “changing the state” is a purely Secretary-of-State exercise. In reality, a key part of the steps to move a company out of California is safeguarding the relationships that make the business valuable—customer contracts, vendor terms, leases, insurance arrangements, and financing. Poorly chosen relocation methods can trigger assignment clauses, consent requirements, or even technical defaults.

Redomestication is particularly advantageous here because it preserves the legal entity itself. That continuity is not a mere convenience; it is a risk-control tool. When the entity remains the same entity, the company is generally not asking counterparties to contract with a “new” company, which reduces administrative friction and can avoid renegotiation pressure. It also helps maintain business credit history and other third-party verifications that rely on entity continuity.

Businesses that treat these issues as an afterthought often spend months cleaning up avoidable problems. The steps for moving a company out of California should therefore be approached as a coordinated legal and operational project—not a filing and a hope.

Step 4: handle FEIN continuity and banking realities with a compliance-first mindset

From the CPA perspective, FEIN continuity is an underappreciated pillar of the steps to move a company out of California. A change that inadvertently creates a new entity can force new payroll registrations, vendor W-9 updates, payment processor changes, and downstream inconsistencies that invite questions during audits or due diligence. It can also create confusion for employees and vendors, who often interpret a new FEIN as a signal that the business has been sold or reorganized.

Redomestication is intended to avoid those disruptions by maintaining the entity’s continuity, including its FEIN, while changing the jurisdiction of domicile. Operationally, that means fewer account changes, fewer vendor re-onboarding requests, and fewer points of failure. Practically, it also means the business can continue collecting receivables and paying obligations without a protracted “transition period” that distracts management.

To implement the steps to move your company out of California in a way that preserves your tax and operational infrastructure, start with the mechanism that is expressly designed to maintain continuity: steps for moving a company out of California through statutory conversion.

Step 5: avoid the “foreign registration trap” that keeps California in the picture

Many owners believe the simplest of the steps to move a company out of California is to register the entity as a foreign company in the new state. While foreign registration can be appropriate in limited circumstances, it often results in ongoing dual compliance. That is the opposite of what most businesses want when they have permanently left California. Dual compliance can mean ongoing filings, fees, and administrative exposure that continue to siphon time and resources.

Even worse, foreign registration can create a false sense of closure. Owners may think they have completed the relocation, while California remains the entity’s home jurisdiction. When the domicile does not change, the company may still face California governance rules and ongoing administrative obligations. The resulting mismatch—operating elsewhere, domiciled in California—can create avoidable friction in banking, contracting, and compliance.

Where the real goal is to sever the domicile connection, the steps to move a business out of California should be structured around redomestication, not perpetual dual registration. See how the steps to move a company out of California are streamlined through redomestication.

Step 6: do not “dissolve first” based on incomplete or misleading advice

One of the most damaging misconceptions I routinely encounter is that the steps to move a company out of California begin with dissolving the entity. Dissolution is not relocation; it is termination. Dissolving can trigger unnecessary administrative burdens, contractual complications, and operational shutdowns—particularly when the company intends to continue business seamlessly in another state.

Moreover, dissolution can complicate continuity of credit history, vendor approvals, and customer confidence. If the company’s name, FEIN, and contracts must be recreated or reassigned, the business has effectively chosen reinvention over relocation. That may be acceptable for a brand-new venture; it is rarely acceptable for an established company with revenue, employees, and ongoing relationships.

The sounder approach is to treat relocation as what it is: a change in the company’s home state, not the end of the company. For most established businesses, the steps for moving a company out of California are best executed via redomestication so the enterprise continues without interruption.

Step 7: implement a disciplined post-move compliance plan to keep the benefits of leaving California

The final of the steps to move a company out of California is ensuring the move actually “sticks” in practice. That means aligning governance records, business addresses, internal policies, banking profiles, and third-party registrations with the new home state. It also means educating internal stakeholders—bookkeeping, payroll, and management—so routine decisions do not inadvertently recreate California exposure.

A disciplined post-move plan is also where many DIY relocations fail. Owners may complete initial filings, but overlook follow-through items that later become urgent during financing, a sale, a dispute with a vendor, or an audit. The cost is not only financial; it is also strategic, because uncertainty about the company’s domicile and compliance posture reduces the enterprise’s credibility during due diligence.

For a comprehensive, continuity-focused approach, the most effective next step is to initiate the steps to move a company out of California using redomestication. When handled correctly, redomestication delivers what business owners are typically seeking: a clean change of domicile, fewer administrative burdens, and a stronger platform for long-term growth outside California.

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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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