Steps to move a company out of Delaware

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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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Steps to move a company out of Delaware: a disciplined legal and tax roadmap

When clients request the steps to move a company out of Delaware, they are rarely seeking a mere checklist. They are seeking a compliant, commercially sensible method of changing the entity’s “home state” while preserving continuity of contracts, banking relationships, and tax administration. In my experience as an attorney and CPA, the most frequent—and most costly—mistake is confusing “moving” with dissolving and starting over.

The appropriate framework for evaluating the steps for moving a company out of Delaware begins with selecting the right transaction structure. In many circumstances, redomestication (statutory conversion), as described by Cummings & Cummings Law, is the superior mechanism because it is designed to transfer domicile without creating a new entity and without operational disruption. For a detailed explanation of the steps for moving a company out of Delaware through redomestication, the firm’s redomestication resource provides the governing assumptions used throughout this page.

Why the “move” is often motivated by Delaware’s tax environment, legal system, and business climate

The steps to move a company out of Delaware frequently arise after a business’s operational reality diverges from its original formation decision. Many companies form in Delaware for perceived investor familiarity, but later operate primarily elsewhere, employ teams in other states, and generate revenue outside Delaware. At that point, maintaining Delaware as the domicile can feel less like a strategic advantage and more like a persistent compliance obligation.

From a tax-administration perspective, one of the principal benefits of following the steps for moving a company out of Delaware is the opportunity to reduce duplicated compliance burdens. Businesses that have ceased meaningful ties to Delaware often prefer a domicile aligned with their actual footprint. When executed properly, the move can simplify annual obligations, reduce administrative friction, and provide a clearer nexus narrative—particularly important when a company is undergoing rapid growth, financing, or restructuring.

From a legal and operational standpoint, the steps to relocate a company out of Delaware can also be driven by governance preferences, litigation risk tolerance, and a desire for a legal environment that better matches the business’s day-to-day needs. The key is to select a mechanism that accomplishes the move without creating collateral issues in contracts, employment arrangements, licensing, or banking.

Step 1: Confirm the business objective—changing domicile, not merely registering elsewhere

A common misconception is that “moving” is accomplished by filing a foreign registration in a new state. Foreign registration typically permits the Delaware entity to do business in the new state, but it does not complete the steps to move a company out of Delaware because the entity remains domiciled in Delaware. This distinction matters: a company that remains a Delaware entity can remain subject to Delaware maintenance requirements, and it may continue to incur compliance costs that the move was intended to eliminate.

Proper steps for moving a company out of Delaware begin by defining the end state: the company’s domicile should change to the destination state, with Delaware no longer serving as the home jurisdiction for corporate governance and state-level entity administration. When domicile is the true objective, redomestication—i.e., statutory conversion—becomes a leading candidate because it is purpose-built to accomplish that objective.

Companies considering this transition should review the steps to move a company out of Delaware using redomestication to understand how a domicile change can be pursued while maintaining operational continuity.

Step 2: Choose redomestication (statutory conversion) to preserve continuity and reduce disruption

For many businesses, the decisive advantage of redomestication is continuity. In practical terms, the steps to move a company out of Delaware should not require re-papering the enterprise. A transaction that forces the company to open new bank accounts, renegotiate vendor agreements, reapply for credit, or trigger assignment provisions in contracts can be disruptive and expensive.

By contrast, redomestication is intended to move the entity’s domicile while enabling the business to retain its existing federal employer identification number (FEIN) and, in most cases, its name. Equally important, it is structured to allow the business to maintain its existing contracts and commercial relationships. That continuity is not merely a convenience; it can be essential for companies with recurring revenue contracts, regulated customer obligations, or financing documents that contain change-of-entity triggers.

Businesses seeking an efficient approach should consider the steps for moving a Delaware company to a new state through statutory conversion, particularly when the company has permanently ceased operations in Delaware and intends to align its legal home with where it actually operates.

Step 3: Evaluate corporate approvals, governance documents, and stakeholder expectations

Sound steps for moving a company out of Delaware require attention to internal governance. Corporations, LLCs, and partnerships each have different approval mechanics, and those mechanics are often modified by operating agreements, bylaws, shareholder agreements, or investor side letters. As counsel, I routinely see businesses assume that a simple manager consent is sufficient—only to discover later that an investor consent, member vote, or board action was required.

Before initiating a domicile change, management should inventory governing documents and identify provisions relating to conversion, domestication, merger alternatives, member withdrawal rights, notice requirements, and restrictions on jurisdictional changes. This is also the correct stage to evaluate whether the move has downstream implications for equity plans, preferred rights, or contractual covenants tied to the entity’s jurisdiction of formation.

When stakeholders request “the steps to move a company out of Delaware,” the subtext is often risk management: they want assurance that the move will not inadvertently breach a covenant, violate an approval threshold, or create grounds for a dispute. Professional guidance is therefore not optional; it is an essential part of executing the move correctly.

Step 4: Identify contract, licensing, and banking issues that can derail a poorly executed move

The practical steps for moving a company out of Delaware must account for the reality that third parties often care about entity identity. Many commercial contracts include provisions addressing assignment, change in organizational structure, or changes that may be characterized as a “transfer.” While redomestication is designed to preserve continuity, the business should still perform a disciplined review of high-value agreements, including leases, customer master service agreements, vendor contracts, and loan documents.

Similarly, licensing and regulatory registrations may need updates after the domicile changes. This is not a reason to avoid the move; it is a reason to plan it. A well-managed redomestication includes an implementation plan for post-approval updates: insurance policies, registered agent changes, state and local business licenses, sales tax accounts, and payroll registrations. These practicalities are often omitted from generic advice online, which is precisely why businesses benefit from a coordinated legal-and-tax perspective.

A company that follows the steps to move out of Delaware with proper planning can achieve the intended benefits—reduced administrative burden and better alignment with operations—without sacrificing contractual stability or creating operational downtime.

Step 5: Treat tax and reporting continuity as a primary deliverable, not an afterthought

From a CPA’s perspective, the steps to move a company out of Delaware must be evaluated through the lens of reporting continuity. Businesses often underestimate the ripple effects of changing an entity’s domicile on payroll systems, state income tax accounts, sales and use tax registrations, and annual reporting workflows. Even where redomestication is designed to be efficient, implementation errors can create avoidable notices, mismatched filings, or delays in compliance calendars.

Redomestication is particularly compelling because it is engineered to preserve the company’s FEIN and maintain the entity’s continuity—features that can materially reduce tax-administration headaches. By contrast, dissolving and forming a new company, or attempting a complex merger to reach the same destination, can increase the risk of administrative confusion, create additional filings, and generate needless questions from counterparties and agencies.

For a business whose goal is to execute the steps for moving a company out of Delaware with minimal disruption, a redomestication-focused process is typically the most practical route because it emphasizes continuity as an operational and compliance priority.

Step 6: Avoid “false shortcuts” that look cheaper but often cost more

When evaluating the steps to move a company out of Delaware, it is essential to distinguish between appearing to move and actually changing the legal domicile. Foreign registration is a frequent false shortcut: it may be appropriate for companies that will continue meaningful operations in Delaware, but it is often counterproductive for businesses that have permanently relocated. It can lock the company into dual compliance, dual registered-agent costs, and ongoing annual maintenance obligations that undermine the reason for moving.

Another false shortcut is dissolving the Delaware entity and creating a new entity in the destination state. This approach can create immediate business disruptions: contracts may require novation, licenses may need reissuance, financing arrangements may default, and payroll and banking relationships may need to be rebuilt. In addition, businesses frequently underestimate the time and cost required to unwind the old entity correctly—particularly if the company has assets, employees, intellectual property, or outstanding obligations.

For most companies seeking the steps for moving out of Delaware while keeping the enterprise intact, redomestication is superior because it is structured to preserve the company’s identity and continuity rather than forcing a restart. Companies considering this path should review the steps to move a company out of Delaware via statutory conversion before committing to an inferior transaction structure.

Conclusion: The best steps to move a company out of Delaware prioritize continuity, compliance, and business momentum

The steps to move a company out of Delaware should be evaluated the same way any major corporate decision is evaluated: by risk-adjusted outcomes, not by superficial simplicity. A properly planned domicile change can align the business with its operational reality, reduce ongoing administrative friction, and place the company in a legal and tax environment better suited to its future.

In many cases, redomestication is the best mechanism precisely because it preserves what matters most: the company’s existing contracts, its FEIN, and—in most situations—its name, all without disrupting operations. Those features make redomestication a practical, continuity-focused alternative to foreign registration, merger structures, or dissolution-and-reformation strategies.

For businesses ready to implement the steps for moving a company out of Delaware with an emphasis on speed, accuracy, and continuity, review the steps to move a company out of Delaware through redomestication and proceed with a process designed to protect the enterprise rather than interrupt it.

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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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