So, you’ve packed your bags, set up shop in a new state, and are ready for a fresh start. But before you get too cozy, let’s talk business taxes. Because moving isn’t just about updating your mailing address.
A lot of entrepreneurs make the mistake of assuming their business will just “follow them” when they move. Spoiler alert: it doesn’t work that way. Failing to update your LLC registration, ignoring multi-state tax obligations, or assuming your old state will just “let you go” can lead to double taxation, surprise penalties, and unnecessary fees.
Not exactly what you had in mind when you moved, huh? Don’t worry, we’ve got your back. At Insogna CPA, a top Austin, Texas CPA, we help business owners navigate state tax laws, stay compliant, and keep more of their hard-earned money. Let’s break it down.
First Things First: Do You Have Tax Nexus in Multiple States?
Before we even get into moving your LLC, let’s talk about tax nexus because this is what determines where you owe business taxes.
What is Tax Nexus?
Nexus is just a fancy word for “connection”—if your business has nexus in a state, you may be required to register, file, and pay taxes there. You might have nexus in multiple states if:
✔ You operate a physical office, store, or warehouse in a state.
✔ You hire employees or contractors in a state.
✔ You store inventory in a fulfillment center (Amazon FBA, for example).
✔ You sell products in a state and hit the economic nexus threshold (like $100,000 in sales).
Why This Matters: If you ignore tax nexus, you could be hit with back taxes, penalties, or compliance issues down the road. The best move? Get ahead of it now with an experienced Austin tax accountant who can review your business’s tax obligations.
What Happens If You Move But Keep Your LLC in Another State?
Let’s say you formed an LLC in California, but now you’ve moved to Texas (hello, zero state income tax!). You might be tempted to leave your LLC in California and just run your business from Texas.
Here’s why that could be a problem:
- Your old state may still require you to file business taxes
- Your new state might require you to register as a foreign LLC (translation: more fees).
- If you don’t properly update your registration, you could end up paying annual fees and taxes in both states.
What to Do Instead: Talk to a CPA in Austin, Texas who can help you decide whether to keep, transfer, or dissolve your LLC in the most tax-efficient way possible.
Moving? Here’s How Your Business Taxes Might Change
When you relocate, your tax filing requirements don’t just automatically update—they change based on state rules. Here’s what you need to know:
1. Do You Need to Register Your Business in the New State?
If you’ve moved but still run your business under an LLC from your old state, you might need to:
- Register as a Foreign LLC in your new state.
- Move (Domesticate) Your LLC to your new state (not all states allow this).
- Dissolve your old LLC and start fresh in your new state.
Tip: Every state has different rules. Consult with a tax advisor in Austin to figure out the best approach.
2. Do You Owe Taxes in Two States Now?
If your business still earns income from your old state, you may need to file taxes in both.
Example:
- You moved from New York to Texas, but your business still generates revenue from New York clients.
- New York may still require business tax filings, even though Texas doesn’t have state income tax.
Fix It: Work with an Austin accounting firm to determine if multi-state tax filings apply to you and how to avoid double taxation.
3. What About Sales Tax?
If you sell products and move your inventory to another state, your sales tax obligations could change.
Mistake to Avoid: Forgetting to update sales tax registrations in states where you now have inventory or economic nexus.
Solution: Let a small business CPA in Austin review your sales tax compliance so you don’t collect the wrong amount or worse, fail to collect it at all.
How to Move Your LLC to a New State (Without the Mess)
If you’ve decided to officially move your LLC, here’s the right way to do it:
Step 1: Choose How to Move Your Business
There are 3 main ways to move an LLC to a new state:
1️. Register as a Foreign LLC – Keep your current LLC but legally operate in your new state.
2️. Domesticate Your LLC – Transfer your LLC to the new state (if allowed).
3️. Dissolve & Re-Form Your LLC – Close your old LLC and start fresh in your new state.
Tip: The right option depends on your business model, tax situation, and state laws—a CPA firm in Austin, Texas can help you choose wisely.
Step 2: Update Business Licenses & Tax Registrations
- Apply for a new state tax ID (if required).
- Update your business licenses, sales tax permits, and payroll registrations.
Step 3: Notify the IRS & Financial Institutions
- Update your business address with the IRS and state tax agencies.
- Update bank accounts, payment processors, and merchant accounts (PayPal, Stripe, Shopify, etc.).
Why It Matters: If your business address doesn’t match IRS records, it can delay tax refunds or cause compliance issues.
Final Thoughts: Don’t Let Multi-State Tax Compliance Become a Nightmare
Relocating is exciting—but ignoring state tax laws can lead to double taxation, IRS penalties, and unnecessary business fees.
At Insogna CPA, we help entrepreneurs navigate LLC relocations, tax nexus rules, and multi-state tax compliance so they can focus on running their businesses—not dealing with tax nightmares..
If you’ve recently moved states, let’s make sure your business taxes are in order! Schedule a tax strategy session with Insogna CPA, the go-to Austin small business accountant, today! 🚀