Lately, many businesses have been moving their operations outside of California. Not only is it highly expensive to start a business, the state is one of the most expensive places to live in the country. Taxes, permit difficulties and real estate prices make it difficult to start or operate a business within state lines. Business owners deciding whether or not to move out of The Golden State have to consider multiple factors. If you are planning to move business out of California, consider these points first.
You Still Pay State Taxes
Unfortunately, you cannot pack up your business and run away from California’s high taxes. The state requires you to still pay taxes after you leave if you are planning to continue conducting business there. The requirements for this vary. Possible situations include if employees from your business live in California, your business has an office space there, or the majority of your sales come from the state. In any of these cases, you will most likely still be liable for the minimum $800 tax and income tax, unless you own a nonprofit social work business. It is risky to quietly move your business operations to another state, and you risk legal action if you get caught. It’s important to be prudent and patient when thinking about relocating out of California.
Moving Is Draining
Moving your business is comparable to moving into a new house, which you may also have to do if you uproot your business. Even while working with Bekins Moving Solutions commercial movers, both are endeavors that disrupt your livelihood. Additionally, you will have to re-register your business in a new state. The amount of time and paperwork associated with moving your business is a vital factor to consider. Is your business profitable enough to take the jump? Is the majority of your clientele based in the state? A cost-benefit analysis of your potential move should include emotional costs as well as fiscal. If you consider this now, your stress will thank you later.
There are many technicalities involved in moving your business to a new state, and many depend on what type of business you own. If you have a corporation, the legalities are tricky. You need to either register as a foreign corporation in your new state, merge the two together via reorganization or dissolve the old corporation to form an entirely new one. You want to consider what is makes the most financial sense for your company, especially if you have property insurance. LLCs have essentially the same moving options. Sole Proprietors have a little more flexibility in the move. There are tax barriers and other obstacles involved in a business move regardless of your company type. Don’t underestimate the legal obligations your business has.
Listen To Legal Professionals
It is smartest to search for legal advice when considering whether or not to move your business out of California. This way, you will not be solely responsible for keeping track of all the ways you can get into legal trouble. Law professionals will be more up-to-date on California-specific policies and loopholes. They can help you decide if moving out of state is even reasonable for your business. Moreover, if you do decide to relocate, they can help you avoid costly fees and post-move audit notices.
On the other hand, perhaps your over-regulated business would benefit immensely from moving to another state. This is an important piece to consider. If you are willing and able to move your company and all its documents and files, maybe leaving California is right for you. Be sure to take your time moving your operations carefully and legally. It can be a complicated process to move your business, but the short-term hindrances might benefit your business in the long run. The proper payoff may make the move worth your while.
There are many considerations when planning to move business out of California. Don’t think moving is easy or hassle-free, because it’s not. It involves a lot of planning and management. Your time, resources and financial stability can be tested in a business move. There are a lot of technicalities that can make it even more difficult, which is why it’s smart to obtain legal advice. If you have considered all the outcomes and obstacles and still want to move your business out of California? Go for it. The right reward can be worth it for your business.