The number of new Tennessee businesses has grown year-over-year every quarter for ten (10) Years.[i] Tennessee remains an attractive location for business owners. I often consult with clients about moving their businesses from Florida, California, or other states to Tennessee. Unfortunately, this is not a simple process and business owners should carefully consider their options before making this important decision. Generally, the business owner moving a limited liability company to Tennessee has two (2) options.
- Domesticate your business within the State of Tennessee. This process occurs when an out of state limited liability company registers as a ”foreign” business entity within the State of Tennessee. This can be a relatively simple process that only requires business owners to obtain a Certificate of Good Standing from their current state and subsequently file a registration form in Tennessee. Oftentimes, business owners do not prefer this option because it means that the limited liability company remains a company of the former state. For example, a California Limited Liability Company would remain a California Limited Liability company, only it would then be properly registered to conduct business in Tennessee. However, registering as a foreign business entity within the State of Tennessee means the company can still be subjected to administrative fees associated with business entities, taxation,[ii] and potential litigation in its former state.
- Register a new limited liability company in Tennessee. Business owners can easily incorporate a new Tennessee limited liability company and either keep their previous limited liability company active in their former state or choose to dissolve it. Clients are often able to keep their same business name and dissolve their business operations in one state and resume their operations in Tennessee. Business owners tend to prefer this method because it allows them to formally become a Tennessee Limited liability company and not just an out of state company registered to conduct business in Tennessee. Once a party has decided to dissolve their former company and reincorporate a new LLC, they should also make sure that all previous assets, such as real estate, intellectual property, and bank accounts are properly updated to reflect the new business entity.
Who handles business filings in Tennessee?
The Tennessee Secretary of State’s Business Services Division is responsible for managing the filings and records of all businesses within the State of Tennessee. Most filings can be submitted online at the Tennessee Secretary of State’s website or in person at their location in downtown Nashville. Business owners should also know that relocating your business to Tennessee and failing to properly register your business as a foreign business entity may result in fines and penalties assessed by the Secretary of State’s office.
There are pros and cons that every business owner should consider discussing with a lawyer and/or tax professional when relocating a business to the State of Tennessee. Relocating business operations is an important issue for small and large business owners alike, and it is essential that they properly assess their options.
If you are interested in relocating your business to the State of Tennessee, one of Cole Law Group’s business attorneys would be happy to assist you. Just give us a call at 615-490-6020 or send a contact message via our website. Our office is centrally located at 1648 Westgate Circle, Suite 301, in Brentwood.
2 This is not tax advice. Please contact a tax professional for any advice related to tax.