Partnership LLC to a married sole-proprietorship in another state
December 18, 2017 3:15 AM
We recently moved to NYC from North Carolina where my now-wife and I had a partnership LLC (before we were married). We would like to dissolve (?) that LLC in North Carolina and reopen a sole-proprietorship/DBA in NYC. Need help.
Our 3 concerns are
1. How to keep the LLC name as a DBA in our new state
2. Is there a way to move the entity to our new state and change it to a sole proprietorship, or is the only way to do this to dissolve and reopen?
3. Could we possibly lose our name in the process?
While I know the answer to this question is "go see a lawyer," this business is so so small (think small Etsy store) and we have so little money in it that we are hoping to do this ourselves. But if we were to talk to a professional, who exactly would that be?
Thanks.
Our 3 concerns are
1. How to keep the LLC name as a DBA in our new state
2. Is there a way to move the entity to our new state and change it to a sole proprietorship, or is the only way to do this to dissolve and reopen?
3. Could we possibly lose our name in the process?
While I know the answer to this question is "go see a lawyer," this business is so so small (think small Etsy store) and we have so little money in it that we are hoping to do this ourselves. But if we were to talk to a professional, who exactly would that be?
Thanks.
Definitely not a lawyer and no expert on official business stuff in general, but my understanding is that (especially for tiny businesses like yours), most/almost all of the "business" stuff (registering, paying fees & licenses, having to follow certain rules & regulations, etc.) happens at the state level, maybe some at the county or city level. So it might be more appropriate to think of this more as "shut down business in NC, start new business in NY." Especially because you are changing the structure/legal nature of the business. Info on how to dissolve in NC and register a new business in NY should be available from the respective states' Secretary/Department of State websites.
Here's a page from the Small Business Administration giving an overview of what may or may not be involved in moving a business, which, to me, does suggest that "moving" a business is viable if you're keeping the same structure (although dissolving & restarting still seems like the cheapest/easiest method on the page), whereas if you're changing from an LLC to a DBA/sole there's not really any "moving" to be done. Also, this page from the IRS suggests that if you're changing structure you need a new Federal Tax ID Number (or EIN) anyway.
So . . . . .
1. How to keep the LLC name as a DBA in our new state
3. Could we possibly lose our name in the process?
Again, I think this primarily and initially happens at the state level - see this page from the SBA on choosing & protecting a business name. So you could "lose" your name if someone in NY is already using it and has registered with the state. But there are some DBA loopholes where your "official" name has to be unique, but you may be able to register a DBA as your existing name even if someone else is using it, depending on the state/county/city laws. So again, you'll want to do some research at the NY Department of State. (Note that even the SBA suggests that the first step & the quickest way to find out if someone is already using the name you want to use in the state is doing some basic web searches. There's also the larger "national" issue where you should search the US Trademark office to see if someone has trademarked the name you want to use, which can be a bigger and more expensive problem.)
2. Is there a way to move the entity to our new state and change it to a sole proprietorship, or is the only way to do this to dissolve and reopen?
As per above, AFAICT, "moving" a one-or-two-person business entity doesn't really do anything, because so much of what applies to your small business is governed at the state level. New York State doesn't care what you may or may not be doing in North Carolina as long as all the appropriate New York State taxes and fees are paid and the NYS rules & regs are followed. If you don't have additional partners in the current LLC and don't have a reason to consider this an "expansion" into NY while still keeping the business registered in NC, everything I'm finding suggests that dissolving & restarting will be the simplest & cheapest route.
posted by soundguy99 at 8:17 AM on December 18, 2017
Here's a page from the Small Business Administration giving an overview of what may or may not be involved in moving a business, which, to me, does suggest that "moving" a business is viable if you're keeping the same structure (although dissolving & restarting still seems like the cheapest/easiest method on the page), whereas if you're changing from an LLC to a DBA/sole there's not really any "moving" to be done. Also, this page from the IRS suggests that if you're changing structure you need a new Federal Tax ID Number (or EIN) anyway.
So . . . . .
1. How to keep the LLC name as a DBA in our new state
3. Could we possibly lose our name in the process?
Again, I think this primarily and initially happens at the state level - see this page from the SBA on choosing & protecting a business name. So you could "lose" your name if someone in NY is already using it and has registered with the state. But there are some DBA loopholes where your "official" name has to be unique, but you may be able to register a DBA as your existing name even if someone else is using it, depending on the state/county/city laws. So again, you'll want to do some research at the NY Department of State. (Note that even the SBA suggests that the first step & the quickest way to find out if someone is already using the name you want to use in the state is doing some basic web searches. There's also the larger "national" issue where you should search the US Trademark office to see if someone has trademarked the name you want to use, which can be a bigger and more expensive problem.)
2. Is there a way to move the entity to our new state and change it to a sole proprietorship, or is the only way to do this to dissolve and reopen?
As per above, AFAICT, "moving" a one-or-two-person business entity doesn't really do anything, because so much of what applies to your small business is governed at the state level. New York State doesn't care what you may or may not be doing in North Carolina as long as all the appropriate New York State taxes and fees are paid and the NYS rules & regs are followed. If you don't have additional partners in the current LLC and don't have a reason to consider this an "expansion" into NY while still keeping the business registered in NC, everything I'm finding suggests that dissolving & restarting will be the simplest & cheapest route.
posted by soundguy99 at 8:17 AM on December 18, 2017
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2. You could dissolve your NC LLC once your NY DBA is registered, or you could have the DBA purchase the LLC. I think the latter is unnecessarily complicated unless there are some assets currently held by the LLC that you want to preserve (e.g. a trademark).
3. Business names are registered on a per-state basis, so your NY business name doesn't have anything to do with your NC business name. Caveat: desirable names are often researched and discarded if they are not available nationally so by having reserved your name in NC you've upped the chances that it's available in other states. There are other aspects to what constitutes a name but since you didn't mention a trademark or a domain name I presume you just mean the business name? In that case no, you could not "lose" your business name simply by registering it in another state.
posted by rada at 8:05 AM on December 18, 2017