How to Move an LLC to California

There are many reasons why a business owner may want to move an LLC to California. This article discusses the California LLC conversion process—known in some states as LLC domestication—to transfer an LLC to California.

Understanding the California Conversion Process

California conversion is a legal process that allows an LLC formed in another state—called an out-of-state LLC or a foreign LLC—to legally transfer to California. An out-of-state LLC that completes a California conversion does not necessarily move its physical location to California—though that can be part of the process. Instead, the LLC changes its domicile state—its state of formation—from the current state to California.¹ The company becomes a California LLC governed by the California Revised Uniform Limited Liability Company Act.² The LLC laws of the company’s original state no longer govern the company after the conversion.

California LLC Conversion vs. California LLC Domestication

Many states use the name LLC domestication for the statutory procedure that changes an LLC’s state of formation. Those states use the term conversion for a similar legal procedure that changes a business’s entity type—from a corporation to an LLC, for example. California law uses the same legal procedure and the same name (conversion) for either transaction.

A Nevada LLC, for example, could use the California LLC conversion process (called domestication under Nevada law) to become a California LLC. Or, 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. So, an out-of-state corporation or partnership could convert into a California LLC (or vice versa), as long as the other state’s law also allows the transaction.³

Step-by-Step Guide to the California LLC Conversion Process

An LLC currently formed in another state completes the steps described below to become a California LLC. Our LLC domestication checklist has additional information about the tasks needed to complete an LLC domestication.

There are two main components to the California LLC conversion process: document preparation and administrative tasks. The conversion documents describe how the conversion will be carried out and how it will affect the company. When the conversion is completed, the conversion documents bind the LLC and its’ members. All conversion documents must be carefully prepared to follow both states’ laws and to ensure the conversion is implemented smoothly.

Prepare the Plan of Conversion

Start the California LLC conversion process by preparing a California LLC plan of conversion—a written document that acts as a blueprint for the conversion.⁴ Include within the plan of conversion:

• The terms and conditions of the conversion;
• The LLC’s name and state of formation before and after the conversion;
• The manner of converting membership interests in the out-of-state LLC into interests in the California LLC; and
• Any other terms that the current state requires or that the members wish to include.

Also include as attachments to the plan of conversion unsigned copies of the draft California articles of organization and California operating agreement.⁵

The plan of conversion should be designed to comply with the requirements of both California law and the law of the state that the LLC is moving from. In some states, the equivalent document is called the plan of domestication. The plan of conversion is an internal company document that is not publicly filed.

Prepare the California Limited Liability Company Articles of Organization – Conversion

Prepare the California Limited Liability Company Articles of Organization – Conversion with all information needed for filing with the California Secretary of State. California law requires an LLC converting into California to file a California statement of conversion and a California articles of organization (the document filed to form a new California LLC).⁶ The California Secretary of State publishes a form (Form LLC-1A) that includes both within a single document.

The completed 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—called a registered agent in most states.

Prepare the Current State’s Conversion or Domestication Document

Prepare the current state’s document that is equivalent to the California statement of conversion in compliance with the current state’s legal requirements. This document will be filed with the current state’s filing office. The title used for the document depends the state in which the LLC is currently formed. Common names include:

• Articles of domestication;
• Statement of domestication;
• Articles of conversion; and
• Certificate of conversion.⁷

Prepare the California Operating Agreement

Prepare a California operating agreement that properly structures the LLC as a California LLC after the conversion. An operating agreement is a highly customized document that addresses topics like profit and loss allocation, distributions, decision-making, income tax classification, and limited liability. A state-specific California operating agreement lets the LLC take advantage of the benefits of California law.

Prepare a Resolution Authorizing the Conversion to California

Prepare 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.

After the necessary documents are in written form, the LLC must complete several administrative steps to implement the conversion and make it effective.

Approve the Plan of Conversion

Approve the plan of conversion by formally authorizing the transaction under the current state’s law and the LLC’s current governing documents.⁸ Approval ordinarily requires a member vote and/or unanimous approval by the LLC’s managers (if applicable). The official approval of the plan of conversion should also include an approval of the text of the draft conversion documents attached to the plan of conversion.

All LLC members should sign on to the plan of conversion to ratify the company’s conversion to California. After it has been approved, the plan of conversion must be kept at the LLC’s principal place of business.⁹

Conduct a Preliminary Name Search

Check the California Secretary of State’s official records to verify that the LLC’s name is available in California. A preliminary name search can be done on the secretary of state’s website. If the name is unavailable, a slight name change may be needed to complete the conversion. Confirming that the name complies with California’s rules for LLC names is also a good practice if there is any doubt.¹⁰

Sign the California LLC Conversion Documents

Obtain the signatures of the appropriate individuals on the conversion documents. A member, manager, or officer with express authority generally signs official documents for a California LLC. 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.¹¹

The California Secretary of State allows filed documents to be signed electronically (e-signed). Documents filed in the current state must follow that state’s signing rules.

File the California Limited Liability Company Articles of Organization – Conversion

File the signed Limited Liability Company Articles of Organization – Conversion with the Business Entities Office of the California Secretary of State. California allows the document to be e-filed. The conversion becomes effective in California once the articles of organization – conversion has been filed and accepted.¹²

File the Conversion Document with the LLC’s Current State

File the conversion or domestication document that the LLC’s current state requires LLCs to file when converting or domesticating out of the state. The document is filed with the current state’s secretary of state or equivalent agency that handles business filings. After the current state’s domestication document is filed and accepted, the conversion to California becomes effective in the original state. The LLC is no longer considered to be organized under the law of its original state.

What LLCs can Convert to California LLCs?

California LLC conversion is not possible for all LLCs. California will not accept an LLC conversion if the other state has no statutory process for LLCs to change states.¹³ In other words, an out-of-state LLC cannot convert to California if the LLC is currently organized in a state that does not authorize the procedure California calls LLC conversion and some other states call LLC domestication.

Conversion options may also be limited by the LLC’s type of business. California law bars most business entities that perform professional services from being organized as LLCs.¹⁴ 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.¹⁵

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.¹⁶

What Laws Govern California LLC Conversion?

The California LLC domestication (conversion) process must follow two states’ laws: California and the LLC’s current state. Conversion documents must comply with both states’ conversion (or domestication) laws, so the final documents depend on the state from which the LLC is moving.

The law of the LLC’s current state controls the following aspects of an out-of-state LLC’s conversion to California:

• Power to convert. The LLC’s current state must allow conversion (or domestication in some states) of an LLC to another state. If the current state does not provide a conversion method, conversion to California is not possible.¹⁷
• Plan of conversion. The current state’s laws determine the exact requirements for an LLC’s plan of conversion.¹⁸
• Conversion approval. The LLC’s managers, members, or both must approve the plan of conversion. The current state’s laws decide how many votes are necessary to approve the plan.¹⁹
• Effective date. The current state’s laws decide the date when the conversion to California is officially effective.²⁰
• Additional exit requirements. The current state may add other requirements that an LLC leaving the state must meet during the conversion process.

What is the Legal Effect 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.

Conversion of an out-of-state LLC to California has the following legal effects:

• No change in company identity. An LLC that converts to or from a California LLC remains the same LLC.²¹ Because it is the same entity, it keeps its same EIN 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.²² 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.²³
• 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.²⁴ 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.²⁵ If the LLC’s legal name changes during the conversion, the new name simply replaces the former name. For example, the name may need to change due to different naming rules between state LLC laws.
• No change to LLC ownership interests. Ownership interests in the LLC are consistent before and after conversion.²⁶ 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.

What are the Benefits of California LLC Conversion?

Although there are other methods, 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. Advantages of statutory conversion include:

• Avoiding business disruption. California LLC 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.
• Keeping 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.
• Keeping 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.
• 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 as before.
• Avoiding dissolution. LLC 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.
• Not requiring 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.

How Much Does California LLC Conversion Cost?

The overall cost of a California LLC conversion includes labor costs, filing fees, and (if necessary) registered agent fees. For more details, read How Much Does It Cost to Move an LLC to Another State? Here is a brief overview of these costs:

• Labor costs. Service providers who manage LLC conversions charge labor costs for their time and effort. The work includes gathering information; preparing and circulating documents for signatures (including e-signatures); communicating with LLC owners and state agencies; and filing documents with the Secretary of State’s office. The total labor costs an LLC incurs depends on what the provider charges.
• Filing fees. An LLC pays filing fees for a California conversion to both the California Secretary of State and the current state’s equivalent governmental agency. California charges a $70.00 filing fee for conversion of an out-of-state LLC to California. An LLC that converts to California must also submit a Statement of Information—which requires a $20.00 filing fee—within 90 days of conversion. The fee amount the converting LLC pays to the original state depends on the state. California charges a $30.00 filing fee to move a California LLC to another state.
• Registered agent fees. An LLC’s registered agent is a person or entity authorized 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 registered agent 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.

How Long Does California LLC Conversion Take?

The length of a statutory conversion procedure depends on the turnaround time for all parties involved. Factors that affect the total time needed include:

• 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.

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:

• Move the business with the owners. Business 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.
• Simplify compliance. 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.
• Save taxes. Each state has its own tax laws. The taxes an LLC pays often depend on whether the LLC has a connection—or nexus—with a state. 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.
• Improve choice of law. 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.
• Promote 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 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.

1. Cal. Corp. Code § 17710.08.
2. Cal. Corp. Code §§ 17701.01 et seq.
3. Cal. Corp. Code §§ 17710.02; 17710.08(a).
4. Cal. Corp. Code § 17710.03(a).
5. See Cal. Corp. Code §§ 17701.02(n) and (s).
6. Cal. Corp. Code § 17710.08(d). The document a California LLC files when converting into another state is called a California certificate of conversion.
7. Fourteen states use the term articles of domestication to refer to the document that must be filed with the state to approve the domestication: Iowa, Massachusetts, Minnesota, Nebraska, New Hampshire, New Jersey, North Dakota, South Dakota, Utah, Vermont, Virginia, Wisconsin, Wyoming, and Indiana. The corresponding document may be called a statement of domestication (Alaska, Arizona, Connecticut, Idaho, Illinois, Mississippi, and Pennsylvania); articles of conversion (Florida, Nevada, North Carolina, Oregon, and Washington) or certificate of conversion (California, Delaware, Georgia, Michigan, Ohio, and Texas). It may also be called a statement of conversion (Colorado, Maine), certificate of domestication (Kansas), request for conversion (Louisiana), or statement/plan of domestication (District of Columbia).
8. Cal. Corp. Code § 17710.08(b) and (c).
9. Cal. Corp. Code § 17710.03(f).
10. Cal. Corp. Code § 17701.08.
11. Cal. Corp. Code § 17710.06(b).
12. See Cal. Corp. Code § 17702.05(c).
13. Cal. Corp. Code § 17710.08(a); Cal. Corp. Code § 17710.02(b).
14. Cal. Corp. Code § 17701.04(b). California defines professional services 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.
15. Cal. Corp. Code § 17701.04(b).
16. See, e.g., Moscone-Knox Professional Corporations Act, Cal. Corp. Code §§ 13400, et seq.
17. Cal. Corp. Code §§ 17710.08(a); 17710.02(b).
18. Cal. Corp. Code § 17710.08(b).
19. Cal. Corp. Code § 17710.08(c).
20. Cal. Corp. Code § 17710.08(d).
21. Cal. Corp. Code § 17710.09(a).
22. Cal. Corp. Code §§ 17710.09(b)(1)-(b)(4).
23. Cal. Corp. Code §§ 17710.09(b)(2)-(b)(3).
24. Cal. Corp. Code § 17710.07(a)(2).
25. Cal. Corp. Code § 17710.09(b)(4).
26. Cal. Corp. Code § 17710.02(a)(1).