What’s the process for moving a company out of California

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The Redomestication Process in a Nutshell

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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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What the process for moving a company out of California should accomplish (and why owners often miss the point)

When clients ask, in substance, what the process is for moving a company out of California, they are typically seeking two outcomes: (1) a lawful change of the entity’s “home state” and (2) a practical exit from California’s ongoing compliance and tax burdens to the greatest extent permitted by law. The mistake is assuming those outcomes automatically follow from “registering” elsewhere or opening a new entity in a new state. In many cases, those approaches merely create a second layer of filings while leaving California obligations intact.

As both an attorney and a CPA, I evaluate this question through two lenses: legal continuity and tax/compliance continuity. The most effective approach is the one that preserves the operating business—its contracts, banking relationships, vendor arrangements, and federal employer identification number—while shifting the jurisdictional “seat” of the entity. For many established companies, redomestication (statutory conversion) is the mechanism designed to do precisely that.

Accordingly, if the real question is what the process is for moving a company out of California without disrupting operations, the discussion should begin with the process of moving a company out of California via redomestication. That process is structured to protect continuity, reduce administrative waste, and avoid common traps that arise when owners rely on incomplete internet advice.

1) Clarify the objective: exiting California’s tax and compliance environment without breaking the business

Before selecting any filing strategy, the first step in the process of moving a company out of California is to define what “moving” actually means for your organization. For some owners, “moving” means relocating employees and facilities. For others, it means changing the state of formation so that the entity is governed by a new state’s statute and administrative system. These are related—but not identical—concepts, and they have different compliance consequences.

From a cost-control standpoint, many businesses seek to minimize exposure to California’s ongoing fees, filings, and tax administration by shifting the entity’s domicile and then aligning operations accordingly. A well-planned redomestication is frequently central to that strategy because it can eliminate the need to keep a California-formed entity alive indefinitely, along with the predictable administrative friction that accompanies that status.

If you are assessing what the process is for moving a company out of California in a way that is both lawful and operationally seamless, it is prudent to start with a structured redomestication plan rather than a patchwork of filings. A concise overview is provided at what the process for moving a company out of California looks like when redomestication is used.

2) Choose the correct mechanism: why redomestication is typically superior to foreign registration or a merger

A recurring misconception is that the process of moving a company out of California is satisfied by forming a new out-of-state entity and “transferring everything over.” That approach often triggers avoidable work: re-papering contracts, updating vendor and customer agreements, changing banking authorizations, revising licensing and insurance, and handling operational confusion about which entity is the contracting party. Those disruptions are not merely inconvenient; they create legal risk.

Another common misconception is that foreign registration in the new state is the “move.” In reality, foreign registration is often best understood as obtaining permission for the same California entity to do business in another state. When business owners pursue this route, they may continue paying for dual compliance—while still operating under the legal framework they intended to leave. In contrast, a merger can introduce unnecessary complexity and cost, particularly when the primary goal is simply to change domicile, not to restructure ownership or consolidate multiple operating companies.

For many established LLCs, corporations, and partnerships, the most direct answer to what the process is for moving a company out of California is: redomesticate the existing entity rather than build a second entity or engineer a merger. To review the approach used by our firm, see how the process for moving a company out of California is handled through statutory conversion.

3) Preserve continuity: keep contracts, the FEIN, and (in most cases) the company name

The principal business value of redomestication is continuity. Properly implemented, redomestication enables the company to maintain its existing contracts rather than forcing a “novation” or assignment scenario across dozens—or hundreds—of agreements. That is not merely an operational benefit. It reduces the risk that a counterparty alleges breach, demands renegotiation, or uses the transition to impose unfavorable terms.

Equally important, redomestication is designed to preserve the entity’s federal employer identification number (FEIN), which helps avoid avoidable payroll complications, vendor onboarding interruptions, and internal accounting “re-starts” that can arise when a new entity is created. Business owners frequently underestimate the cascade of downstream issues that follow from obtaining a new FEIN, including confusion across payroll providers, retirement plans, insurance, and third-party compliance tools.

When evaluating what the process is for moving a company out of California while keeping the business intact, continuity features should be treated as non-negotiable selection criteria. The statutory conversion method emphasized at this explanation of the process for moving a company out of California is specifically aimed at preserving identity, operations, and institutional history.

4) Anticipate procedural realities: filings, timelines, and how errors commonly occur

In practice, the process of moving a company out of California is not a single filing; it is an integrated sequence. The entity must be eligible for redomestication, the destination state must be selected appropriately, and the documentation must be prepared with precision. Owners often assume they can “piecemeal” the move—filing something in one state first and “fixing it later.” Unfortunately, later is where cost and risk accumulate.

Errors commonly arise in the fine print: inconsistent entity names, mismatched dates, incorrect references to entity type, or documentation that fails to align with the governing statute. Another typical failure point is mishandling authority and approvals—particularly where there are multiple owners, manager-managed LLCs, or corporate governance requirements. These are not academic issues; they can delay approvals, create conflicting public records, or trigger bank and vendor concerns.

Because of these procedural realities, the better question is often not what the process is for moving a company out of California in theory, but what the process should be when executed correctly. A structured, flat-fee approach is outlined at what the process for moving a company out of California entails when handled end-to-end.

5) Avoid the “dissolve and restart” trap: why dissolution is frequently a costly mistake

One of the most damaging misconceptions is that the process of moving a company out of California requires dissolving the existing entity and starting over. Dissolution may appear simple, but it frequently creates avoidable legal and administrative consequences: contract termination concerns, licensing disruptions, creditor and vendor re-onboarding, and confusion as to historical liabilities and record retention.

From a tax-administration standpoint, dissolution-and-restart also tends to create a messy paper trail for bookkeeping, payroll systems, and compliance programs that were built around the existing FEIN and entity identity. Business owners typically discover the true cost only after they attempt to open new bank accounts, re-establish merchant processing, or “re-paper” customer agreements that are not easily transferable.

If your goal is to understand what the process is for moving a company out of California without unnecessary disruption, dissolution should generally be treated as a last resort rather than a default. Redomestication is specifically designed to avoid that needless break in continuity; see the process for moving a company out of California without dissolving the business.

6) Plan for post-move obligations: compliance alignment and operational housekeeping

Even when redomestication is executed cleanly, the process of moving a company out of California does not end with an approval notice. A responsible plan includes post-move housekeeping: updating internal governance documents where needed, aligning registered agent information, confirming bank and payment processor records, and ensuring that vendor and customer communications are consistent with the entity’s continuing identity.

It is also prudent to coordinate with your tax professional regarding go-forward filing positions, nexus considerations, and administrative obligations. The point is not that a move eliminates all complexity; rather, a properly structured redomestication can meaningfully reduce needless dual-state friction while preserving operational continuity. The objective is a durable transition that withstands scrutiny from banks, counterparties, and state agencies.

For owners who approach this strategically, the process for moving a company out of California becomes an opportunity to modernize compliance practices, streamline corporate records, and reduce ongoing administrative distraction. To begin with a properly sequenced plan, consult this guide to the process for moving a company out of California through redomestication.

Conclusion: a disciplined answer to what the process is for moving a company out of California

For an established business, the most important consideration is not merely whether a move is possible, but whether it can be executed without operational interruption, contract risk, and avoidable administrative waste. When clients ask what the process is for moving a company out of California, the best answer is the one that focuses on continuity, efficiency, and legal correctness—not shortcuts.

Redomestication is often the superior mechanism because it is designed to preserve the entity’s identity while changing its domicile, allowing the business to keep its contracts, FEIN, and in most cases its name. By contrast, foreign registration can keep the company tethered to the California entity framework, and mergers or dissolutions commonly create unnecessary expense and complexity.

To proceed with a clear, professionally managed strategy, begin at the process for moving a company out of California using redomestication. This is the most direct path for many owners who seek to exit California’s business environment while preserving what they have already built.

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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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