In this article, you’ll learn 7 ways to prepare for moving your business to another state including:
- Legal aspects of moving your business
- What goes into moving a brick-and-mortar business vs. an e-commerce business to another state
- How to prepare for moving day
- And more!
So, you want to your business to another state. You know that there’s a lot to be done, but you might have some questions about what exactly goes into the relocation process.
To increase the likelihood of a smooth transition, you need to spend time on preparation.
Here are 7 ways to prepare for moving your business to another state:
1. Look into State Registration
Do you operate as a sole proprietor or a limited liability company (LLC)?
There is no formal action required to form a sole proprietorship, so you don’t really have to worry about state registration if you are a sole proprietor who is changing states.
If you have an LLC, on the other hand, your business entity is registered in your current state. This means that if you change states, you have to take action.
There are a couple of possibilities.
A foreign qualification is a good option for small business owners who want to maintain a presence in their old state – even after the move to the new state is completed. By filing a foreign qualification, you inform the new state that you’re going to be registered in multiple states.
Are you planning to stop operating in your current state? If so, you may want to dissolve your LLC in your current state and register it in your new state. Through articles of dissolution, you can inform your original state of your change in status. It’s very important to complete this step so that you don’t put yourself on the hook for business taxes and penalties in the future.
You also need to register in the new state, but fortunately, it’s not too difficult to set up and maintain an LLC. With that being said, you should talk to a lawyer if you’d feel more comfortable with a professional’s assistance.
2. Research Local & State Licensing Requirements
Your local and state licensing requirements depend on your location and type of business. This means that as a small business owner who is changing states, you’re going to have to research the new requirements.
Here are some common local licensing requirements:
- Operating license – you want to get this before you start operating in the new city.
- Zoning permits – your location has to be zoned for your type of business.
- Fire department permit – in some cities, an inspection is necessary, as well.
- Health permits – depending on your type of business, you may need a health permit.
Here are some common state licensing requirements:
- Seller’s license – you may need this if your business sells certain types of goods.
- Occupational license – for some occupations, such as electricians and plumbers, you might be required to get an occupational license.
- Environmental permits – if you operate in an industry that impacts the environment, you may need an environmental permit.
This is a quick overview of common local and state licensing requirements – check out our guide on what licenses you need to run a business for more information.
3. Consider Staffing
You might be able to keep some or all of your current employees if you move your business to another state.
If you have remote staff, it’s going to be a lot easier to keep them on board, but it’s also possible to convert in-person staff to remote staff if they don’t need to physically be on-site to fulfill their duties. And small business owners who are moving to a new location that is within driving distance of the old location may have employees who are fine with commuting.
That said, you may have to let go of some employees. There’s a right way and a wrong way to lay off employees. The right way is you give them a few months – or more – advanced notice, so they have time to look for a new job before the business move happens. The wrong way is to let them know at the last minute. By being prepared, you can do this the right way.
What if you need to hire employees in your new state?
You should start by looking at the local hiring laws – they may be much different from the laws in your home state. Here are a few things that vary state-by-state:
- Minimum wage – the federal minimum wage is $7.25 per hour, but that number is much higher in certain states. If you rely heavily on minimum wage workers, this could have a significant impact on your business.
- Unions – in some states, unions are very common. Their presence (or lack of presence) is going to impact how you staff your small business.
- Termination policies – you don’t want to think about terminating your future employees at this stage of the game, but it’s a possibility, and it’s important to know what can be done before you encounter an underperforming employee.
You should consult with a lawyer on local employment laws, as the cost of the consultation is likely to be far less than the cost of running into trouble down the road.
4. Coordinate the Move
If you have an e-commerce business, you might not have to physically move anything across state lines when you move your business to another state. But if you have a brick-and-mortar business, coordinating the move is going to take up a lot of time. You may have to move inventory, equipment, and office furniture to your new address.
You have to decide between hiring movers and doing it yourself. This decision should not be made lightly, as moving expenses can be high – particularly for long distances. You’re going to pay a lot more to move from New York to California than you’d pay to go from New York to New Jersey. In addition, it’s important to find a moving company that is going to handle your business assets with care.
The importance of getting quotes from a handful of moving companies and reading online reviews cannot be overstated. You could potentially save a high three-figure or low four-figure dollar amount by choosing the right company – in moving costs and lack of damage to your things – by spending a few hours doing your due diligence.
5. Reach Out to Your Bank
You probably handle most of your banking from your phone, but this doesn’t mean that you can move to another state without doing anything from a banking standpoint.
If you have an account with a big bank, you should give your bank a call and see what has to be done – you might just have to provide them with an updated address and fill out a few documents.
If you have an account with a local bank, on the other hand, you should ask if they have physical locations in your new state. While you may not have to go to the physical location regularly, you could be required to come to a branch occasionally – and you’re not going to want to drive a long distance.
Want to close your account? You should do it before you change locations, as some local banks might make it difficult – or impossible – to do this remotely.
6. Spend Time on Your Marketing
If you are moving a brick-and-mortar business to another state, you should adjust your marketing to target potential customers in the new location.
You can start by changing your old business address to your new business address on your website and social media profiles. It’s also a good idea to make social media posts on the major platforms announcing the move – ahead of time. By doing this, you can build up anticipation among your target audience in your new state.
Depending on your budget, you can look into certain forms of paid advertising – your options include social media ads, influencer marketing, television ads, and print ads. The best marketing channel for your small business varies based on where your ideal customer “hangs out.”
7. Create Financial Projections
Your annual revenue and expenses are likely going to be much different after your business relocation – particularly if you have a brick-and-mortar business.
Let’s look at what impacts your financial projections for each category:
Your revenue is, as you surely know, determined by your number of sales multiplied by the average price of your offerings. After your change of address, however, one or both of these components might change a lot. Say you have a larger target audience in your new location – you may be able to project a higher number of sales. But if customers in the new location have less spending power vs. the old location, you may have to price your offerings at lower amounts. Your estimates aren’t going to match reality, but they are necessary so you have a general idea of what to expect in a different state.
While revenue projections are tricky, it’s probably going to be easier to estimate your future expenses. Here are a few costs to consider:
- Labor costs: for many small business owners, labor costs make up a large percentage of their operating budget. So, it’s important to look up salary data in your new location, which can be heavily impacted by the cost of living – if you’re moving from New York to Florida, for example, you could end up spending a lot less on your workforce.
- Real estate costs: as with labor costs, real estate costs can look a lot different from state to state. Luckily, online resources allow you to quickly figure out what you can expect to pay for office space, warehouse space, or any other purpose.
- Other: your other operating expenses – utilities, insurance, and cost of goods sold – might not change much, but you should still come up with projections. With cost of goods sold, you may be able to keep getting raw materials or inventory from the same suppliers due to the globalized nature of our economy.
- State income tax: the state income tax in your new location is going to impact your net profitability – and the impact could be very large depending on the state. If you’re going to be doing business in California, for example, you may have to pay high taxes.
You need both time and financial expertise to project your revenue and all of your expenses – consider reaching out to a Certified Public Accountant (CPA) for assistance – they can help your small business beyond tax season.
The Bottom Line
It’s not easy to move your business to another state, but by being well-prepared, you can remove some of the difficulties and hit the ground running at your new location.
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