Domestication Definition

Learn more about what domestication is in business.

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statement of information definition

If you want to operate your business in another state, you have two choices: domestication or foreign registration. Foreign registration means your company remains based in its original state, but gets permission to do business in the new state. Domestication involves actually moving the legal organization from the original state to the new state. Once the company is domesticated, the company can’t do business in its original state.

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What are domestication’s advantages over foreign registration? To begin with, it is cheaper to do business in one state than in two. If you do your research, you may find a new state to domesticate in that has lower corporate, sales, income, and franchise taxes than your old state. States also vary widely in how much they charge in filing fees, such as for annual reports. And again, paying once is better than paying annual fees in your original and foreign registration state. 

Domestication Disadvantages

The domestication process can be expensive. Because the definition of domestication and the requirements for accomplishing it vary from state to state, it also is a complex undertaking. 

And again, it’s not offered in every state, so if you’re moving from Florida (which allows domestication) to Hawaii (which does not allow domestication), your corporation cannot follow you.  

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How to Domesticate Your Business in a New State

Though the process may vary based on state legal requirements, the general domestication process is as follows: 

Of course, you also must pay any fees required for these filings. And after you have domesticated your company, it’s wise to update your operating agreement or other governing documents. 

Summary

Domestication can be a good way for a business owner to legally relocate a small business to another state. Just make sure your original state and the new state allow domestication.

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Once you domesticate in your new state, our worry-free compliance service can help you keep track of annual filing deadlines and other requirements to keep your LLC in good standing. If your LLC or corporation needs a registered agent in your new state, we can help you find one.

Disclaimer: The content on this page is for informational purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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