As an LLC owner, if you plan to move your business to Delaware (DE), you must know the answers to the following questions:
- “Does Delaware allow LLC domestication?”,
- “Is Delaware LLC domestication a good choice?”
- “How to domesticate an LLC in Delaware?
This Delaware LLC domestication guide has all the information related to the questions mentioned above and more.
What is Delaware LLC Domestication?
LLC domestication in Delaware means changing the location or domicile of your LLC from any state to Delaware. In other words, if you want to move your Georgia LLC to Delaware, for instance, LLC domestication is the best way to do so.
In Delaware, LLC Domestication and LLC Conversion are used interchangeably. In many other states, LLC Conversion means changing LLC to any other entity such as a corporation, LLP, etc.
However, in Delaware, LLC conversion means both i.e; changing different entities into LLC or domesticating a foreign entity into a Delaware entity.
By LLC domestication, you change the governing laws of your LLC. Domesticating your LLC into Delaware will have the following benefits over other methods of moving your LLC to Delaware:
- LLC domestication allows you to maintain previous business relationships.
- No need to renew contracts made in the previous state.
- No need to change bank accounts and credit ratings.
- You can retain your EIN (Tax ID Number).
- No need to rehire employees.
- No need to transfer assets.
How to Domesticate your LLC in Delaware
There’s always something new to learn in the ever-changing landscape of business, and this same goes for LLC domestication in Delaware. Below, we explained the process of transferring an LLC from any state to Delaware via DE LLC domestication in 3 simple steps.
Acquire a Certificate of Good Standing
A certificate of good standing is also called a certificate of existence or certificate of status in some states. It is a legal document issued by the state authorities, usually the secretary of state.
This certificate verifies that your LLC or corporation was legally formed and operated in a state compliance manner.
In Delaware, the certificate of Good Standing is not mandatory to apply for a Certificate of Conversion-Articles of Organization to domesticate your out-of-state LLC in Delaware.
However, Getting a Certificate of Good standing will be better as you are moving your business out from the LLC’s home state, as this document will verify that your business is in good standing with the state.
To prove that your LLC is up to date on all important business marks, you need to submit a certificate of status.
After getting a certificate of good standing, you will have proof that you have timely paid your LLC taxes, submitted LLC annual reports and fees, and follow the state laws in all business operations in the state where you initially registered your LLC.
Approval of LLC Domestication
Before you file articles of domestication with the Delaware Department of State, you need to acquire approval from the majority of LLC members in the case of multi-member LLC.
Depending on your LLC operating agreement, arrange the LLC member meeting and have voting in the fovor of LLC domestication to Delaware and save the decision in your official record.
File an Articles of Domestication Delaware
To formally move your LLC from the LLC’s home state to Delaware, you need to file certificates of conversion known as articles of domestication in other states.
With Delaware certificate of conversion, you will see Delaware articles of organization form as well. So you need to file the Delaware certificates of conversion along with the Delaware articles of domestication.
To download both forms, click on the link below:
Finally, depending on the LLC management structure mentioned in your LLC operating agreement, you need the signature of the authorized person to sign the Delaware LLC domestication form. After completing all the information, send the complete forms to:
Delaware Department of State
Division of Corporations
401 Federal Street – Suite 4
Dover, DE 19901
Requirements to Complete Delaware Articles of Domestication Form
As mentioned earlier that Delaware articles of domestication are filed with the Delaware articles or organization; the following information/documents will be needed to complete the LLC domestication process:
- LLC domestication approval from LLC members
- Name of the domesticating entity (The name of your LLC with which you used to operate your business in the previous state)
- Name of the domesticated entity (The name of your LLC with which you operate in Delaware)
- The name of the previous state where your LLC was registered
- The date when your LLC was formed initially
- Delaware articles of organization form with Delaware registered agent information
- Signature of the authorized person to initiate LLC domestication
Delaware LLC Domestication Fee (Cost)
To convert an out-of-state LLC into a Delaware LLC, you need to pay the following fee to the Delaware Department of State along with the Delaware articles of domestication:
- Articles of Domestication: $200
- Articles of Organization: $90
- Total to Domesticate and file: $290
Alternatives to LLC Domestication Delaware
If you do not plan to move your LLC to Delaware permanently, or for any other reason Delaware LLC domestication does not seem suitable, the followings are the alternative to Delaware LLC domestication:
What Next After Delaware LLC Domestication?
Once the state of Delaware domesticates your LLC, the laws of the previous state will no longer apply to your LLC.
Now your LLC will be governed under the LLC statute of Delaware. Now, to remain compliant with the laws of Delaware, you need to:
- Make sure you pay outstanding LLC federal taxes or debts in the previous state.
- Keep your registered agent information up to date. If you don’t have one, you can review top registered agent services here.
- Follow your LLC operating agreement.
- Acquire licenses and permits specifically required by the new state.
- Regularly submit annual reports and fees.
- Pay Delaware sales tax (6% on the total sales).
Moving an LLC out of Delaware
The Delaware Department of state allows an LLC to move out of Delaware via LLC domestication. However, the law of the other state must permit LLC domestication in its statute.
If the law of the other state does not permit LLC domestication, you should look for alternatives of LLC domestication to transfer your LLC out of Delaware.
For the states that allow LLC domestication, you need to submit a Delaware certificate of status to domesticate your LLC there. Click on the following link to get a Delaware certificate of status.
FAQs on How to Domesticate an LLC in Delaware
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