Converting a California LLC or corporation to a Nevada entity involves relocating its legal domicile from California to Nevada while maintaining business continuity. The process differs depending on whether you’re dealing with an LLC or a corporation, as each entity type is governed by distinct statutes in both states. Below, I’ll provide detailed, step-by-step instructions for both scenarios—converting a California LLC to a Nevada LLC and converting a California corporation to a Nevada corporation. Since this is a legal and tax-sensitive process, I strongly recommend consulting a business attorney and a tax professional to tailor the steps to your specific situation and ensure compliance.
The two main approaches for either entity type are:
- Domestication: Transferring the existing entity to Nevada without dissolving it, preserving its identity (e.g., EIN, formation date).
- Dissolution and Reincorporation/Formation: Dissolving the California entity and creating a new Nevada entity, transferring assets and liabilities.
California law does not explicitly allow outbound domestication for LLCs or corporations in a straightforward manner, so the dissolution and re-formation method is often necessary unless a workaround (like a merger) is used. Nevada, however, permits inbound domestication for both LLCs and corporations if the original state allows it. I’ll cover both methods for each entity type, focusing on practical steps as of April 08, 2025.
Converting a California LLC to a Nevada LLC
Step 1: Assess Feasibility and Implications
- California Restrictions: California Corporations Code § 17710.01 et seq. governs LLCs but does not clearly permit outbound domestication to another state without dissolution. You’ll likely need to dissolve and reform unless a merger or conversion workaround applies.
- Nevada Law: Nevada Revised Statutes (NRS) § 86.544 allows an LLC to domesticate into Nevada if the original state permits it.
- Tax Implications: California may still impose taxes (e.g., $800 minimum franchise tax) if the LLC continues to operate there post-move. Nevada has no state income tax or franchise tax for LLCs.
Option 1: Domestication (If Feasible)
Step 2A: Verify Eligibility
- Confirm with a lawyer whether California allows your LLC to domesticate out. If not, you may need to form a Nevada LLC and merge the California LLC into it (a common workaround).
Step 3A: Approve the Plan of Domestication
- Draft a Plan: Include:
- Current LLC name and proposed Nevada name (must be unique in Nevada and include “LLC” or similar).
- Terms of domestication (e.g., how membership interests convert).
- Statement that Nevada law will govern post-domestication.
- Member Approval: Obtain approval from members per your operating agreement (typically a majority unless otherwise specified).
Step 4A: File in Nevada
- Articles of Domestication: Submit to the Nevada Secretary of State with:
- California LLC name and jurisdiction.
- New Nevada name.
- Certificate of Good Standing from California (from the California Secretary of State).
- Member approval documentation.
- Fees: $75 (Articles of Organization) + $150 (initial list of managers/members) + $200 (state business license).
- File online via SilverFlume or mail to: Secretary of State, 202 North Carson Street, Carson City, NV 89701.
Step 5A: Notify California
- File a Certificate of Cancellation (Form LLC-4/7) with the California Secretary of State once domestication is complete, assuming no further California registration is needed. Include a final tax clearance from the California Franchise Tax Board.
Step 6A: Update Records
- Retain your EIN (since the entity continues).
- Update IRS address via Form 8822-B.
- Notify banks, vendors, and clients.
Option 2: Dissolution and Re-Formation (More Common)
Step 2B: Approve Dissolution
- Member Approval: Per your operating agreement, members must approve dissolution.
- File Certificate of Dissolution: Submit Form LLC-4/7 to the California Secretary of State (no fee if mailed with tax clearance).
- Settle Taxes: File a final California LLC tax return (Form 568) and pay any outstanding fees (e.g., $800 annual tax).
Step 3B: Form a New Nevada LLC
- Name Check: Verify availability on Nevada’s Secretary of State website. Reserve for $25 (optional).
- Articles of Organization: File with:
- LLC name.
- Registered agent (must be Nevada-based).
- Management structure (member-managed or manager-managed).
- Fees: $75 + $150 (initial list) + $200 (business license).
Step 4B: Transfer Assets
- Assign all California LLC assets, contracts, and liabilities to the Nevada LLC via member-approved agreements. This may have tax implications—consult a professional.
Step 5B: Obtain a New EIN
- Apply via IRS Form SS-4 online (new entity requires a new EIN).
Converting a California Corporation to a Nevada Corporation
Step 1: Assess Feasibility and Implications
- California Restrictions: California Corporations Code does not support outbound domestication for corporations, making dissolution or a merger approach more likely.
- Nevada Law: NRS § 92A.270 allows inbound domestication if California permits it (which it typically doesn’t without a workaround).
- Tax Implications: Similar to LLCs, California taxes may persist if operations remain there; Nevada offers no corporate income tax.
Option 1: Domestication (If Feasible via Workaround)
Step 2A: Verify Eligibility
- Since California doesn’t allow direct outbound domestication, a common workaround is forming a Nevada corporation and merging the California corporation into it. Confirm with a lawyer.
Step 3A: Approve the Plan
- Draft Plan of Domestication or Merger: Include:
- Current and proposed names.
- Share conversion terms.
- Nevada governance statement.
- Board and Shareholder Approval: Obtain per California Corporations Code § 1900 (typically majority vote).
Step 4A: File in Nevada
- Articles of Domestication: Include California good standing certificate and approval details.
- Fees: $75 (Articles of Incorporation) + $150 (initial list) + $500 (business license).
- File via SilverFlume or mail.
Step 5A: Notify California
- File a Statement of Withdrawal or dissolution paperwork (Form DISS STK) with the California Secretary of State once the move is complete.
Step 6A: Update Records
- Retain EIN and update IRS via Form 8822-B.
Option 2: Dissolution and Reincorporation (More Common)
Step 2B: Approve Dissolution
- Board and Shareholder Approval: Per California law.
- File Certificate of Dissolution: Form DISS STK ($15 in person, free with tax clearance if mailed).
- Settle Taxes: File final Form 100 and pay franchise tax.
Step 3B: Form a New Nevada Corporation
- Name Check: Reserve if needed ($25).
- Articles of Incorporation: Include name, registered agent, shares, and directors.
- Fees: $75 + $150 + $500.
Step 4B: Transfer Assets
- Move assets and liabilities to the new corporation via board approval.
Step 5B: Obtain a New EIN
- Apply via Form SS-4.
Step 6: Post-Conversion Steps (LLC or Corporation)
- Nevada Compliance: Obtain a state business license ($200 LLC, $500 corporation annually) and file annual lists ($150).
- California Operations: If operating in California, register as a foreign entity (LLC: Form LLC-1, $70; Corporation: Form S&DC-S/N, $100) and pay $800 annual tax.
- Update Records: Notify IRS, banks, vendors, and update contracts/licenses.
- Registered Agent: Appoint a Nevada agent (e.g., a service costing $100-$150/year).
Timeline and Costs
- Timeline: 1-3 months, depending on method and state processing (expedited options available).
- Costs: $500-$2,000+ (fees, legal/tax advice).
Key Notes
- Domestication is ideal but rare due to California’s restrictions; a merger (forming a Nevada entity and merging the California entity into it) is a practical alternative.
- Tax Clearance: California requires it before fully exiting (Form FTB 3555 for LLCs/corporations).
- Proceed with professional help to navigate nuances and avoid penalties.