Obligations and Considerations Behind Moving a Business

The process of courting Toyota motor cars to move to Texas didn’t involve lengthy trips to California. It involved serious talks and a prolonged look at what would ultimately play out best for the company. Texas and California have, in fact, been locked in a battle over industry for quite a few years. Texas managed to prove itself as the more attractive location. Differences in shipping location, tax incentives and existing production lines made Texas seem like a smart move for the company.

Politics aside, there are a variety of legitimate reasons why a company would relocate, and why that move might be beneficial to them. There are certain obligations to be aware of, as well as benefits to consider.

Obligations

According to the Small Business Association, moving is fairly common. Depending on the type of corporation you maintain, moving can carry specific obligations. For instance, an LLC corporation will require you to register as a foreign corporation in the new state you move to, or you can have each member transfer their interest to a new LLC formed in the new state. S or C corporations can do a corporate merger of sorts, where they form a new corporation to merge with the previous one.

There are also tax and licensing considerations as well, which require you to register in the new state and cease your activities formally in the old one.

Considerations

Every corporation will be different, but there are important considerations to keep in mind before you move.

• Infrastructure: What is in the area that can help to develop your business beyond its current capacity? You should consider where your stock is housed during the move, and how how your warehouse needs might change.
• Costs: Aside from taxes, will the costs of running your operations be sustainable? Higher costs for workers may yield better benefits in production and justify an increase in price.
• Staffing: Is the talent your company needs available in the new location? You may also consider offering some members of your team incentives to bring them with you.

These considerations are important for you and your employees. Scaling a business means changing its makeup, but you need to retain the key people that help your business run. You should also put yourself in an environment that has the type of workers you are looking for.

Benefits

Tax incentives are some of the biggest benefits to moving, and are often the driving force behind a relocation. The film industry is notorious in this regard, taking advantage of credits in different cities to shoot in a variety of locations. There are also practical considerations like weather or proximity to major cities. Part of the draw of working for companies like Google are the unique places that the campuses are placed. Some companies also consider moving for partnerships, which helps to cut costs on transport or manufacture. Sony currently assembles its televisions in Mexico and imports them into the US for this reason.

Some cities are also conducive to growth, either through tax policy or customer base. You have to carefully consider which cities will help you grow long term. Moving twice in a short period can cost you more than a single relocation.

Final Thoughts

Moving your business is not uncommon, and is usually a sign that times are good for you. Moving often raises logistical questions about relocating stock and employees, but carries important tax considerations as well. Even if your business is done entirely on the Web, you will need to make sure that you physically relocate your business entity. Make sure that you check with your state’s regulatory bodies to see what is required, and that you consider what happens during the move as well.