How to Move an LLC to California (2022 Legal Guide)

Business owners who move to California often use California LLC conversion to “bring the business with them” to California. California law allows out-of-state LLCs to become California LLCs using a statutory procedure called conversion.¹ A California LLC conversion is equivalent to what may be called domestication in other states.

Conversion to a new state does not necessarily involve a physical relocation, though that can be part of the process. Instead, what changes is the LLC’s legal state of organization or charter state. The change of a charter state effectively means that the laws of the state of formation no longer govern the LLC. Instead, the LLC becomes governed by California law.² After the conversion is completed, the converting entity changes to a converted limited liability company or converted entity.³

Why Transfer an LLC to California?

California LLC conversion is particularly useful when owners move to California from another state. Business owners may want to transfer the LLC from the original state of formation to California for several reasons:

• Moving the Business with the Owners. Business owners that move to California often want to establish a firm connection with a new home state. For example, if the owner of a web-based business moves from California, it might be more convenient to have the business governed by California law.
• Simplifying Compliance. LLCs that are governed by the law of the state where the owners live often have fewer filing requirements than LLCs that are governed by the laws of another state. For example, if an LLC is formed in Delaware but primarily does business in California, it needs to satisfy two sets of reporting requirements: Those of Delaware (where it is formed) and those of California (where it operates). Converting the Delaware LLC to a California LLC could reduce its annual filing fee and reporting requirements.
• Saving Taxes. Each state has its own tax laws. An LLC’s tax obligations often depend on whether the LLC has a connection—called a nexus—with the state. If the LLC’s owners have moved, the LLC’s charter could be the only factor establishing a taxable nexus with the state of formation. Moving the LLC to California can break this nexus, exempting the LLC from tax obligations in the state where the LLC was originally formed.
• Better Choice of Law. If the provisions of the California Revised Limited Liability Company Act are a better fit for the LLC’s business objectives than the laws of the state where the LLC was originally formed, converting to a California LLC can have legal advantages.
• Fostering Better Professional Relationships. California professionals are more likely to be familiar with California law. If the owners live in California, converting the LLC to a California LLC makes it easier to find lawyers, accountants, and other professionals in the community who are familiar with California requirements and conventions.

These reasons are the most common, but others may apply, depending on how California law compares to the law of the state where the LLC was originally formed.

What are the Benefits of California LLC Conversion?

Although there are other alternatives, statutory conversion is usually the best way to transfer an LLC to California. Compared to the alternatives, California LLC conversion streamlines the LLC domestication and is the least disruptive process. Benefits of statutory conversion include:

• Keeping the Same Employer Identification Number (EIN). Changes to a business EIN often cause tax and administrative complications. Unlike some other forms of business relocation, conversion allows the LLC to keep the same EIN and continue to file taxes as it always has.
• Keeping the Same Bank Accounts. Because a domesticated LLC is treated as a continuation of the old LLC and keeps the same EIN, there is no need to close and re-open bank accounts following a California LLC conversion. The LLC can keep the same accounts with no interruption.
• Keeping Existing Business Relationships. California LLC conversion does not change the LLC’s rights and obligations. All of the LLC’s business contracts and relationships continue in the California LLC without impairment.
• Avoiding Business Disruption. California LLC conversion is a legal procedure that happens behind the scenes. There is no need to fire and re-hire employees, transfer assets, or take other actions that could cause a disruption in the LLC’s normal operations.
• No Dissolution Required. LLC conversion does not terminate the LLC. It continues to exist as the same LLC, but the LLC is no longer governed by the law of the prior state. Because the LLC continues to exist—albeit as a California LLC—there is no need to go through the expense and hassle of dissolving the LLC in the prior state.
• No Foreign Registration Requirements. Because the LLC becomes a California LLC, there is no need to register the LLC as an out-of-state (foreign) LLC in California. And, unless the LLC plans to continue to conduct business in the state it is moving from, it need not register as a foreign LLC in that state, either.

These benefits make LLC conversion a useful tool to move the LLC to California efficiently, with relatively little burden and expense.

What LLCs can Convert to California LLCs?

The California LLC conversion procedure is not available to all LLCs. California will not recognize a conversion that is not authorized by the laws of the other state.⁴ Conversion is not permitted if the LLC was originally formed in a state that does not have a conversion (domestication) statute.

Limitation on LLCs that Perform Professional Services

Conversion options may be limited by the LLC’s type of business. Under California law, most business entities that perform professional services cannot be organized as LLCs.⁵ Because professional service businesses cannot operate as LLCs in California, an out-of-state LLC that performs professional services wants to move to California, it will usually need to organize as a professional corporation or other business form authorized to perform the relevant professional services.⁶ There is an exception if a California licensing statute expressly authorizes LLCs to hold the specific license, certificate, or registration.⁷

How Much Does California LLC Domestication Cost?

As discussed at How Much Does it Cost to Move an LLC to Another State?, the overall cost of a California LLC conversion includes labor costs, filing fees, and (if necessary) registered agent fees.

• Labor costs include document preparation, document circulation and communication, document signatures (including e-signatures), filing with the Secretary of State’s office, and communicating with state agencies and the LLC owners. Labor costs depend on the fees charged by the provider.
• Filing fees must be paid to both the Secretary of State of California and the equivalent governmental agency of the state that the LLC is moving from. The filing fee for conversion of an out-of-state LLC to California is $70.00.⁸ In addition, a Statement of Information must be submitted within 90 days of conversion and requires a $20.00 filing fee.
• Registered agent fees depend on the registered agent but are usually around $125.00 per year for a corporate registered agent. If at least one LLC owner or manager lives in California and does not mind having his or her address listed as the registered agent in the public records, an owner or manager may serve as the registered agent. In most cases, though, the benefit of a stable, third-party address for service of process is worth the cost of a corporate registered agent.

How Long Does California LLC Conversion Take?

As discussed at How Long Does the LLC Domestication Process Take?, the length of a statutory conversion procedure depends on how long it takes the document preparer to prepare and file documents, how long it takes the LLC members and managers to review and sign documents, and how long it takes the state agency to process the filing.

What Laws Govern California LLC Conversion?

The California LLC domestication (conversion) process is governed by two sets of law: California law and the law of the state that the LLC is moving from. Because the conversion statute requires compliance with the laws of both states, the exact documents that are required can vary depending on the state that the LLC is moving from. Documents must be drafted that comply with the conversion and domestication laws of both states.

The law of the state of formation (the state where the LLC was originally formed) controls the following aspects of the California LLC domestication process:

• Power to Convert. The LLC’s current state must allow conversion of an LLC to another state. If the current state does not provide a mechanism for conversion, conversion to California is not possible.⁹
• Plan of Conversion. The current state’s laws determine the precise requirements for an LLC’s plan of conversion.¹⁰
• Conversion Approval. Once created, the LLC’s managers, members, or both must approve the plan of conversion. The current state’s laws determine the votes necessary to approve the plan.¹¹
• Effective Date. The current state’s laws determine the date that the conversion to California becomes formally effective.¹²
• Additional Exit Requirements. The current state may impose additional requirements that an exiting LLC must satisfy during the conversion process.

These requirements work in conjunction with California law to ensure that the domestication is valid under the law of both California and the state from which the LLC is moving. The conversion process is discussed in more detail below.

What is the California LLC Conversion Process?

The California conversion process begins with the preparation and adoption of the plan of conversion, then moves through a series of sequential filings to ensure that the LLC is properly domesticated to California.

Our LLC Domestication or Conversion Checklist provides an overview of the general conversion process. This section focuses on the specific California requirements for two key documents: the plan of conversion and Articles of Organization – Conversion (Form LLC-1A).

The Plan of Conversion

Regardless of whether the LLC is moving from or moving to California, it will need a plan of conversion.¹³ The plan of conversion must comply with both California law and the law of the other state.

The plan of conversion must generally be approved by all managers and a majority of members.¹⁴ Although it is not an official document, the plan of conversion is a governing document of the LLC. It must be maintained at the principal place of business or designated records-retention area.¹⁵

While the details of the plan of conversion can change depending on the laws of the other state, a California plan of conversion should include, at a minimum:

• Terms and conditions of the conversion;
• The jurisdictions where the LLC is currently organized and will be organized after conversion;
• The official name the LLC will do business under after conversion;
• A description of how current ownership interests in the LLC will be converted to interests in the converted entity;
• Provisions of governing documents—including articles of incorporation and operating agreement—that will bind LLC members after the conversion; and
• If the LLC is moving to another state, any other plan of conversion requirements of the laws of the state where the LLC is moving.¹⁶

The plan of conversion must also meet similar requirements of the law of the other state. In many cases, the plan of conversion will include other provisions necessary to authorize and facilitate the conversion process.

Articles of Organization – Conversion (Form LLC-1A)

Articles of Organization – Conversion (Form LLC-1A) is the official document necessary to put the LLC on the records of the California Secretary of State. Once the LLC members approve the plan of conversion, the LLC must file Form LLC-1A with the California Secretary of State.¹⁷ The completed, printed, signed form and filing fee may then be hand-delivered to the Secretary of State’s office or filed by mail to:

California Secretary of State
Business Entities
P.O. Box 944260
Sacramento, California  94244-2600

Checks should be made payable to the California Secretary of State. Expedited processing is available for an additional fee—but only if the completed form is hand-delivered to the Secretary of State’s Sacramento office.

Follow-Up Steps

Within 90 days after filing an LLC’s Form LLC-1A, the LLC must complete and file with the Secretary of State a Statement of Information, which is also available on the Secretary’s website.¹⁸ After the initial filing, the Statement of Information must be filed by the LLC once every two years.

Creating new governing documents—principally the articles of organization and the operating agreement—is one of the most important aspects of converting an LLC to a new state. An LLC moving to California should prepare an operating agreement in compliance with California’s LLC statutes.¹⁹ The new governing documents should be tailored to take maximum advantage of benefits provided by the state where the LLC will continue to operate.

Once a conversion is completed, the new articles of organization, operating agreement, and any other applicable governing documents govern the company’s operations. These new documents provide the framework for the business to operate in its new state. Members are bound by the provisions of the new governing documents.²⁰

What is the Legal Effect of California LLC Conversion?

An LLC that converts to or from a California LLC remains the same LLC.²⁴ The LLC retains all its assets and liabilities, and it is still the same company in terms of transactional history. It still owes the same debts to the same creditors—with any liens surviving the conversion.²⁵ Members remain liable for any LLC debts they have personally guaranteed, but not to any greater extent than before the conversion.²⁶

California LLC conversion has the following effects:

• No Change in Property Ownership. After conversion, the company has the same property rights and right to recover receivables as it had before conversion.²⁷ An LLC that goes through conversion can keep its same bank accounts. The company continues functioning as usual during and after the conversion.
• No Need for Post-Conversion Deed. If a converted LLC owns California real estate, it is unnecessary to execute a new deed, though filing a certificate of conversion with the relevant county recorder could eventually be needed to provide formal notice of record ownership.²⁸
• Legal Actions Unaffected. Pending legal actions involving a converting LLC continue uninterrupted.²⁹ If the LLC’s legal name changes as a result of the conversion—due to different naming conventions between state LLC laws, for instance—the new name is simply substituted for the former name.
• LLC Remains Party to All Contracts. Existing contractual relationships between the LLC and other entities or individuals are generally unaffected. The LLC has the same contractual rights and obligations as before the domestication.
• Continuity of Ownership. LLC ownership interests also remain consistent before and after conversion.³⁰ Members keep the same membership percentages, and their rights and duties in relation to one another and to the company stay the same—except to the extent expressly altered in the new governing documents.

These changes allow the LLC to stay in existence and continue operations without interruption while changing its governing law to California.

1. Cal. Corp. Code §17710.01.
2. In California, the LLC that is converting to a new state is known as a converting entity. Cal. Corp. Code §17710.01(d).
3. Cal. Corp. Code §17710.01(a) and (b).
4. Cal. Corp. Code §17710.08(a); Cal. Corp. Code §17710.02(b).
5. Cal. Corp. Code §17701.04(b). Professional Services are defined as services that “may be lawfully rendered only pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act [or the Yacht and Shipbrokers Act].” Cal. Corp. Code §13401.
6. See, e.g., Moscone-Knox Professional Corporations Act, Cal. Corp. Code §§13400, et. seq.
7. Cal. Corp. Code §17701.04(b).
8. The filing fee for converting a California LLC into another state is $30.00.
9. Corp. Code §17710.08(a); Cal. Corp. Code §17710.02(b).
10. Corp. Code §17710.08(b).
11. Corp. Code §17710.08(c).
12. Corp. Code §17710.08(d).
13. Cal. Corp. Code §17710.08(b).
14. Cal. Corp. Code §17710.03(b)(1).
15. Cal. Corp. Code §17710.03(d).
16. Corp. Code §17710.03(a).
17. The Form LLC-1A can be completed online at the California Secretary of State’s website (www.sos.ca.gov/businessprograms/business-entities/forms). When filed, the Form LLC-1A effectively registers the LLC with the Secretary and obligates the entity to pay annual taxes and fees to California’s Franchise Tax Board. Cal. Rev. & Tax. Code §17941. The annual minimum tax for most California LLCs is $800.00.
18. Cal. Corp. Code §17702.09.
19. Similarly, an LLC moving from California should prepare an operating agreement that complies with the laws of the new state.
20. Cal. Corp. Code §17710.03(c).
21. Cal. Corp. Code §17710.06(b).
22. Cal. Corp. Code §17710.06(c).
23. Cal. Corp. Code §17710.06(d); Cal. Corp. Code §17710.04.
24. Cal. Corp. Code §17710.09(a).
25. Cal. Corp. Code §17710.09(b)(2) and (3).
26. Cal. Corp. Code §17710.09(d).
27. Corp. Code §17710.09(b)(1 – 4).
28. Corp. Code §17710.07(a)(2).
29. Corp. Code §17710.09(b)(4).
30. Corp. Code §17710.02(a)(1).