Have you ever considered moving your LLC to Texas (TX)? If so, you might be wondering, “Does Texas allow LLC domestication?”, “Is there any alternative to Texas LLC domestication?”, or “Is Texas LLC domestication a good choice?”
Many LLC owners have similar questions including “How to domesticate an LLC in Texas? If you are one of them, this Texas LLC domestication guide is for you.
What is Texas LLC Domestication?
LLC domestication in Texas means changing the location or domicile of your LLC from any state into Texas. In other words, if you want to move your Wyoming LLC to Texas, for instance, LLC domestication is the best way to do so.
By LLC domestication, you change the governing laws of your LLC. Domesticating your LLC into Texas will have the following benefits over other alternatives of moving your LLC to Texas:
- 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 rating.
- You can retain your FTIN (Fedral Tax ID Number aka EIN).
- No need to rehire employees.
- No need to transfer assets.
Is Texas LLC conversion and Texas LLC domestication the same?
Yes, in the state of Texas, LLC domestication is one of the types of LLC conversion. In other words, Texas LLC conversion is a broader term, and Texas LLC conversion is a part of it.
See Texas Business Organizations Code (“BOC”) chapter 10 for detailed information. In short, Texas LLC conversion means:
- The Texas domestic entity starts operationg as a non-code organization (foreign entity) of any type. For instance, Texas LLC start operating as New York corporation.
- A non-code organization continue to operate as a Texas domestic entity of any type. For example, Florida LLP start operating as Michigan LLC.
- A Texas domestic entity of one type continue to operate a Texas domestic entity of another type. For example, Texas LLC starts operating as Texas corporation.
- A Texas domestic entity of one type start operating as a foreign entity of the same type. For instance, Texas LLC continue to operate as Wyoming LLC.
- A foreign entity of one type continue its business operations as as a Texas domestic entity of the same type. For example California LLC continue to work as Texas LLC.
Points 4 and 5 are also termed as continuance, domestication, or transfer transactions under the laws of the jurisdiction of foreign entity formation.
How to Domesticate your LLC in Texas
There’s always something new to learn in the ever-changing landscape of business, and this same goes for LLC domestication in Texas. Below, we explained the process of transferring an LLC from any state to Texas via TX LLC domestication in 3 simple steps.
Make sure LLC Domestication is Permitted by the Law of LLC’s Home States
As all states do not permit LLC domestication, for an LLC domestication to be effective, the law of LLC home state should also permit the cross-jurisdiction conversion. Consult your LLC’s governing documents aka operating agreement and the law of the jurisdiction where you initially formed your LLC.
LLC Name Availability Check in Texas
The name of domesticating LLC must be available under Texas BOC. Make sure that your domesticating LLC name has not been already taken by another LLC in Texas.
To check the LLC name availability in texas, click on the following link to the Texas Comptroller of Public Accounts website:
If the name of domesticating LLC is the same as, deceptively similar to, or similar to the name of any existing LLC (domestic or foreign), or any name reservation or registration filed with the Texas secretary of state, you cannot file for Texas LLC domestication.
Get Tax Clearence
Texas LLC domestication requires that your LLC does not have any outstanding debts or taxes in the home state. To prove that you need a document called a certificate of good standing known as certificate of account status in Texas.
Certificate of account status from the Texas Comptroller of Public Accounts states that the domesticating entity is in good standing.
In other words, this certificate verifies that your LLC has no franchise tax reports or payments due. Make sure that the certificate of account status is valid through the effective date of conversion.
Alternate Method to Texas Certificate of Acount Status
Alternatively, you can also add a statement in the certificate of conversion that the domesticated entity is liable for payment of the required franchise taxes.
You need to submit the certificate of account status while filing a Certificate of Conversion in Texas.
For tax certificates or questions on tax status, contact the Texas Comptroller of Public Accounts’ Tax Assistance Section at (512) 463-4600 or (800) 252-1381. You can also send your request at [email protected].
Texas LLC Plan of Conversion
The state of Texas requires you to adopt a plan of conversion to domesticate your LLC to Texas. The plan of conversion must comply with BOC § 10.103. and must be in writing and include:
- The name of the domesticating LLC (the name with which your LLC used to operat in the home state)
- The name of the domesticated LLC (the name with which your LLC will operat in Texas)
- A statement that the domesticating LLC is not changing its entity type (your LLC remains an LLC in Texas and has not adopted any other business structure)
- A statement that the domesticating LLC is continuing its existence as Texas LLC
- The name of LLC’s jurisdiction of formation the state name where you initially registered your LLC)
- If the domesticated LLC is the filing entity, any certificate of formation are required to be filed under this code
- If the domesticated LLC is not a filing entity, the certificate of formation or similar organizational document are required
- A statement that the domesticating LLC is electing to continue as Texas LLC after the conversion takes effect and its conversion has been aproved by the LLC’s home state.
File Texas Certificate of Formation
You need to complete the Texas certificate of formation by downloading the form from the Texas secretary of state website using the link below:
The following statement must be added while using the above secretary of state form for the certificate of formation.
The Texas LLC has been formed under the Texas plan of conversion. Please include your LLC’s previous name, address (in the home state), date of formation (when LLC was initially formed in the home state), and the formation state name in accordance with BOC § 3.005(7).
In addition to the above statement, your Texas certificate of formation must include the following information:
- Certificate of conversion signed on behalf of authorized person of your LLC
- Certificate of conversion includes statement that plan of conversion has been approved by the previous state and laws of Texas.
- Tax clearance or statement that converted entity is liable for payment of franchise taxes.
- Texas secretary of state file number for converting entity, if any.
File Articles of Conversion Texas
To formally move your LLC from the LLC’s home state to Texas, you need to file the certificate of Conversion downloaded from the Texas Secretary of state.
With Texas articles of conversion, you also have to submit the Texas certificate of formation and Texas Plan of Conversion.
Moreover, you also need to submit the certificate of account status to show that your LLC does not have any outstanding LLC taxes or debt or the domesticated LLC is liable to pay state taxes in Texas.
To Gat Specific License or Permit in Texas
In Texas, Certificate of Conversion for Converting A Foreign Entity to A Texas Filing Entity is equivalent to Certificate of domestication in other states.
The is no form available by the Texas secretary of state. You have to draft your certificate of conversion following the official instructions. To download Information on Converting a Foreign Entity to a Texas Filing Entity, click on the link below:
The Texas certificate of conversion must include the following information:
- Your LLC name in its home state, organizational form (LLC), and jurisdiction of formation of your LLC (LLC’s home stae).
- Your LLC’s name in Texas, organizational form (LLC), and jurisdiction of formation (Texas) after conversion.
- A statement that a signed plan of conversion is on file at the principal place of business of your LLC, and the address of the principal place of business in LLC’s home state.
- A statement that a signed plan of conversion will be on file after domestion at the principal place of business of your LLC, and the new address of the principal place of business at Texas.
- A statement that a copy of the plan of conversion will be furnished without cost on written request by the your previous LLC before the conversion or by your Texas LLC after the conversion to any owner or member of LLC in the home state or in Texas.
After drafting the Texas certificate of conversion, send this document along with the Texas certificate of formation, plan of conversion, and certificate of account status (Two copies of all documents optional, for return of the file and stamped copy) to:
Fax: (512) 463-5709
Secretary of State
P.O. Box 13697
Austin, Texas 78711-3697
In Person Filing Address:
Secretary of State J
ames Earl Rudder Office Building
Austin, Texas 78701
Texas LLC Domestication Fee (Cost)
To convert an out-of-state LLC into a Texas LLC, you need to pay the following fee to the Texas Secretary of State along with the Texas certificate of conversion:
- Certificate of conversion fee: $300
- Certificate of formation fee: $300
- Total to Domesticate and file: $600
Alternatives to LLC Domestication Texas
If you do not plan to move your LLC to Texas permanently, or for any other reason Texas LLC domestication does not seem suitable, the followings are the alternative to Texas LLC domestication:
What Next After Texas LLC Domestication?
Once the state of Texas 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 Texas. Now, to remain compliant with the laws of Texas, 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 in Texas.
- Regularly submit annual reports and fees.
- Pay Texas sales tax (6.25% on the total sales).
Moving an LLC out of Texas
The Texas Department of state allows an LLC to move out of Texas via LLC domestication. However, the law of the other state must permit LLC domestication in its statute.
For the states that allow LLC domestication, you need to submit a Texas certificate of status to domesticate your LLC there. Click on the following link to get a Texas certificate of status.
FAQs on How to Domesticate an LLC in Texas
Aisha Noreen is an owner of a small business with more than 9 years of experience in the marketing industry. With the wisdom of an old soul, she always seeks innovation and mind-blowing ROI techniques. Her unique approach helped many small businesses thrive and she can surprise you in many ways as well. Believe it or not, her energy, passion, and creativity are contagious enough to transform your business and take it to another level.