How to Move an LLC to California

An out-of-state LLC can change its state of organization to California through statutory conversion. California conversion is a legal transaction that changes an LLC’s state of organization, the state whose law primarily governs the company. An out-of-state LLC, also called a foreign LLC, that converts to California becomes a California LLC governed by the California Revised Uniform Limited Liability Company Act (Cal. Corp. Code §§ 17701.01 through 17713.13). The LLC is otherwise the same business entity before and after the conversion process. Whether the conversion can proceed also depends on the laws of the state the LLC is leaving. To find out whether your LLC qualifies and what the process involves, request a free analysis of your LLC move.

Many states use the name domestication for the legal procedure that changes an LLC’s state of organization, also called its domicile. In many of those states, a business can complete a conversion to change its entity type, such as from a corporation to an LLC. California law uses the same legal procedure and the same name, conversion, for either transaction. A Nevada LLC, for example, could use the California conversion process (called domestication under Nevada law) to become a California LLC. A California corporation could carry out a conversion to change into a California LLC. A business can even use the California conversion process to change its entity type and its domicile state in the same transaction. An out-of-state corporation or partnership could convert into a California LLC, as long as the other state’s law also allows the transaction. This article discusses the process for moving an LLC to California, but that process is only available if the LLC’s current state’s law also allows conversion or domestication.

California LLC Conversion Requirements

California LLC conversion under Cal. Corp. Code § 17710.08(a) permits a foreign LLC to convert into a California domestic LLC, provided the converting entity’s home jurisdiction also authorizes that conversion. An out-of-state LLC considering conversion to California must comply with both California law and the law of the state the LLC is leaving. California law controls the process and documents filed in California and determines the conversion’s legal effects. The other state’s law governs whether the LLC can convert to California, the content of the written plan of conversion if required, the standard under which the LLC’s members or managers must approve the plan of conversion, and the effective date for the conversion.

Eligibility for California LLC Conversion

An LLC considering conversion to California must confirm that it is eligible for the process. The principal requirement is that the current state must authorize LLC conversions. Not all states do. The current state may call the process domestication, conversion, or another name. The important part is that the state must have a statutory procedure that lets an LLC organized in that state change its domicile to a new state.

Business owners must also review the LLC’s articles of organization and operating agreement to ensure there are no provisions that prevent conversion to a new state. If any restrictions are present, the LLC may need to formally amend the documents to allow the procedure.

An out-of-state LLC must also confirm that California lets LLCs engage in the company’s field of business. California law bars most business entities that perform professional services from being organized as LLCs. There is an exception if a California licensing law specifically allows LLCs to hold the license, certificate, or registration needed to perform the professional services. Because LLCs cannot perform most professional services in California, an out-of-state LLC that performs professional services cannot convert to a California LLC in most cases. The business can instead organize as a California professional corporation or another business form that can perform those services.

Required Documents for California LLC Conversion

The California LLC conversion process involves preparing and adopting several conversion documents that must satisfy both states’ requirements. The conversion documents memorialize the terms of the conversion and control the company when the conversion takes effect.

• Plan of Conversion. A Plan of Conversion designed to comply with the requirements of both California law and the law of the state that the LLC is moving from. The plan of conversion is an internal company document that is not publicly filed.
• Articles of Organization, Conversion Statement. The California Articles of Organization, Conversion (Form LLC-1A) for filing with the California Secretary of State. This single form document includes both the statement of conversion and the articles of organization. The form lists information about the LLC before and after the conversion, declares that the terms of the plan of conversion were properly approved, and identifies the name and address of the LLC’s agent for service of process.
• Conversion Document for Filing in Prior State. Prepare the current state’s document that is equivalent to the California statement of conversion in compliance with that state’s legal requirements. This document will be filed with the current state’s filing office. Common names include articles of domestication, statement of domestication, articles of conversion, and certificate of conversion.
• California Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as a California LLC after the conversion, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection. An operating agreement is a highly customized document that addresses topics like profit and loss allocation, distributions, decision-making, and income tax classification.
• Resolution Authorizing Conversion. A company resolution that approves the LLC’s conversion to California and that officially approves the California articles of organization and operating agreement as the new governing documents binding the LLC when the conversion is completed.

The Articles of Organization, Conversion and other conversion documents accept electronic signatures under California law. Filing through the California Secretary of State’s Business Entities Office allows e-filing for electronically signed documents.

The LLC also completes several administrative tasks to implement the conversion: approving the plan of conversion by formally authorizing the transaction under the current state’s law and the LLC’s current governing documents (approval ordinarily requires a member vote or unanimous approval by the LLC’s managers if applicable); conducting a preliminary name search with the California Secretary of State to verify that the LLC’s name is available in California (if the name is unavailable, a slight name change may be needed); obtaining signatures on the conversion documents from appropriate individuals (a member, manager, or officer with express authority generally signs official documents for a California LLC, and if an LLC is member managed, California law requires all members to sign the statement of conversion unless the LLC’s governing documents allow fewer than all members to approve a conversion); filing the signed Articles of Organization, Conversion with the Business Entities Office of the California Secretary of State (the conversion becomes effective in California once the articles of organization, conversion has been filed and accepted); and filing the conversion or domestication document that the LLC’s current state requires with the current state’s secretary of state or equivalent agency (after the current state’s conversion document is filed and accepted, the conversion to California becomes effective in the original state and the LLC is no longer considered to be organized under the law of its original state).

Cost of Moving an LLC to California

Moving an LLC to California involves substantial work to comply with both states’ requirements simultaneously. The scope of work described above includes document preparation (articles, operating agreement, plan of conversion), coordination with members for approvals and signatures, name searches, and filing submissions to two separate state agencies. This complexity is the primary cost component. Professional preparation and state agency coordination are essential to ensure the conversion complies with both states’ laws and documents are filed correctly.

In addition to professional service costs, the California Secretary of State charges a $70.00 filing fee for the Articles of Organization, Conversion. The converting LLC must also submit a Statement of Information, which requires a $20.00 filing fee, within 90 days of conversion. These are government charges paid to California. The fees paid to California are in addition to any filing fees that must be paid to the LLC’s original state. Most states charge a separate fee for LLCs converting out of state.

• Standard Filing to California: $70.00 (Articles of Organization, Conversion) + $20.00 (Statement of Information, within 90 days) = $90.00 total to California.

An out-of-state LLC that converts to California will also incur labor costs and, if applicable, registered agent fees. Labor costs are the amounts charged by the service provider the LLC retains to manage the California conversion. Service providers may charge a flat fee or charge by the hour, with fee amounts varying by provider. Work that goes into a conversion includes obtaining and organizing information, drafting the conversion documents, communicating with the business owners and state agencies, and filing documents with state agencies. An out-of-state LLC must also appoint an agent for service of process in California to accept services of process for the LLC. The agent’s name and address are provided to the California Secretary of State and listed in the public records. The fee to hire a corporate registered agent in California is usually around $125.00 per year. An LLC owner or manager who lives in California can serve as the agent for service of process if he or she does not mind having his or her address made publicly available. The privacy and stability a corporate registered agent provides is worth the cost in most cases. To find out what your specific move will cost, request a free analysis of your LLC move.

Processing Time for California LLC Conversion Filings

A California LLC conversion proceeds in several steps. The length of the process depends on how long each step takes. Each step depends on the responsible person’s turnaround time: the business owners’ time to organize the necessary information, the service provider’s time to review the information and prepare the conversion documents, the owners’ time to approve and sign the draft documents (or request revisions), the service provider’s time to file the final conversion documents with state agencies, and the state agencies’ time to accept and process the filed documents.

The California Secretary of State processes conversion filings in the order received. The conversion becomes effective in California once the Articles of Organization, Conversion has been filed and accepted. The conversion’s effectiveness in the original state depends on the original state’s law and when the original state’s conversion or domestication document is filed and accepted. For a detailed breakdown of each phase in the conversion timeline, see our guide to LLC conversion and domestication.

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 an LLC from its original state of formation to California for several reasons. Owners who move to California often want to establish a solid business connection with their new home state. For example, an owner of a web-based business who moves to California might find it more convenient to run the business under California law. An LLC governed by the law of the state where the owner lives often has fewer filing requirements than an LLC governed by the laws of a different state. For example, a Delaware-chartered LLC that does business mainly in California needs to meet two sets of reporting requirements; those of Delaware (where it was 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. Each state has its own tax laws and the taxes an LLC pays often depend on whether the LLC has a connection with a state, called a taxable nexus. If an LLC’s owners move, the LLC’s charter could be the only factor creating a taxable nexus with the state of formation. Converting the LLC to California can break the nexus with the original state, exempting the LLC from tax obligations in the original state of formation. California Revised Limited Liability Company Act rules may be a better fit for the LLC’s business goals than the laws of its current state. If so, converting to a California LLC can have legal benefits. 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 local professionals who know California requirements and norms. These are the most common reasons. There may be others depending on how California law compares to the law of the state where the LLC was formed.

Legal Effect and Benefits of California LLC Conversion

California LLC conversion is designed to allow for a smooth transition. The process lets the LLC continue existing and operating without interruption. After conversion, the LLC is a California LLC governed by California law, but it is otherwise mostly unchanged. Statutory conversion is usually the best way to transfer an LLC to California. Compared to the other options, California LLC conversion is more streamlined and less disruptive.

Conversion of an out-of-state LLC to California has the following legal effects and benefits. No change in company identity: an LLC that converts to California remains the same LLC. Because it is the same entity, it keeps its same EIN (Employer Identification Number) and otherwise continues its same tax identity for reporting purposes. No change in property rights: after conversion, an LLC has the same property rights as before conversion. It owns the same assets and can keep its same bank accounts. No change in assets or liabilities: existing contracts remain intact and are not affected by the conversion. The LLC keeps any right to receive payment for goods and services. It still owes the same debts to the same creditors, with any liens surviving the conversion. No need for new deed or asset assignments: a converted LLC does not need to record a new deed if it owns California real estate. The company may wish to record with the county recorder a certified copy of its certificate of conversion to provide written notice that the converted LLC owns the property. Documents assigning other assets are also unnecessary. No effect on legal actions: ongoing lawsuits or court processes involving the LLC continue uninterrupted during and after conversion. If the LLC’s legal name changes during the conversion, the new name simply replaces the former name. No change to LLC ownership interests: ownership interests in the LLC are consistent before and after conversion. Members keep the same membership percentages, and their rights and duties in relation to one another and to the company stay the same. Members who wish to make changes to the company’s ownership can do so in the LLC’s new governing documents.

California LLC conversion avoids business disruption: the conversion is a legal process that happens behind the scenes. There is no need to fire and re-hire employees, transfer assets, or take other actions that could disrupt the LLC’s normal operations. The process keeps the same entity identity: a business that completes a California conversion is the same entity before and after the conversion. The LLC keeps the same Employer Identification Number (EIN) and continues to file taxes as always. Other forms of business transfer require a business to change its EIN, which often causes tax and administrative problems. The process keeps the same bank accounts: an LLC that completes a California conversion has no need to close and re-open bank accounts. The California LLC after conversion is a continuation of the same company, so it can keep the same accounts with no interruption. The conversion keeps 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 as before. The conversion avoids dissolution: conversion does not end the LLC. It remains the same LLC, but it is now governed by California law and not the law of the prior state. The LLC still exists, so there is no need for the expense and hassle of dissolving it in the old state. The conversion does not require foreign registration: an LLC that becomes a California LLC through a conversion has no need to register as an out-of-state (foreign) LLC in California. The LLC must register as a foreign LLC in the old state only if it plans to continue doing business there. These benefits make LLC conversion a useful tool to move the LLC to California efficiently, with much less trouble and cost than the other options.

California LLC Laws That Apply After the Move

The California Revised Uniform Limited Liability Company Act (Cal. Corp. Code §§ 17701.01 through 17713.13) imposes ongoing requirements on all domestic LLCs, including those formed through conversion from another state. An LLC that converts to California becomes subject to these obligations immediately upon effectiveness of the conversion.

California Statement of Information and Compliance Requirements

California requires all domestic LLCs to file a Statement of Information with the California Secretary of State within 90 days of formation or conversion and then every two years thereafter. The filing fee is $20.00. This biennial reporting requirement is a standard compliance obligation for all California LLCs.

California LLC Operating Agreement Requirements

California refers to an LLC’s internal governance document as an “Operating Agreement” under Cal. Corp. Code § 17701.02(s). The Operating Agreement governs the LLC’s internal affairs, including the rights and obligations of members and managers, profit distributions, and management structure. The Operating Agreement is not filed with the state; it is maintained by the LLC as a private document.

California Member and Manager Protections

California law provides fiduciary duties and member protections for LLCs. The California Revised Uniform Limited Liability Company Act imposes a duty of care and duty of loyalty on members and managers. These duties protect members and creditors and promote reasonable business conduct within the LLC. Members must act with the care, competence, and diligence ordinarily exercised by a member in a similar capacity, and must manage the LLC’s business in a manner consistent with the duty of loyalty, which includes the requirement to account to the LLC and its other members regarding property or information of the LLC.

Alternatives to California LLC Conversion

When conversion is not available because the other state’s law does not allow it, a merger-based reorganization achieves the same result. The reorganization involves forming a new California LLC and merging the out-of-state LLC into it, with the California LLC as the surviving entity. The surviving LLC succeeds to all property, contracts, and obligations of the original LLC by operation of law. The California Secretary of State charges a filing fee of $70.00 for the certificate of merger filing, in addition to the $70.00 formation fee for the new California LLC. For a detailed explanation of how the reorganization process works, see our guide to LLC reorganization. For a state-by-state comparison of LLC conversion and domestication laws across all states, see our guide to LLC conversion and domestication by state.

Moving an LLC Out of California

California permits outbound LLC conversion under Cal. Corp. Code § 17710.02(a). A California LLC can convert to another state’s jurisdiction, provided that the destination state also authorizes the procedure.

California Outbound Conversion Requirements

A California LLC that converts to another state must file a Certificate of Conversion with the California Secretary of State’s Business Entities Office. The outbound filing must include a plan of conversion approved by the LLC’s members or managers in accordance with Cal. Corp. Code § 17710.03(a). California does not require a separate certificate of surrender. The Certificate of Conversion completes the California side of the transaction. The destination state will require its own formation and conversion (or domestication) documents.

Filing Fees for Moving an LLC from California

The California Secretary of State charges a filing fee of $30.00 for an outbound Certificate of Conversion. The destination state will charge separate filing fees for its formation and conversion documents.