How to Move an LLC to District of Columbia
There are many reasons why a business owner may want to move an LLC to District of Columbia. This article discusses the use of domestication, known in some states as LLC conversion, to transfer an LLC to District of Columbia.
This article discusses the process for moving an LLC to District of Columbia, but that process is only available if also allowed by the laws of the state that the LLC is moving from. Click the button below for a free analysis of the law of both states. If domestication is allowed, the tool will outline the steps that must be taken to move the LLC to District of Columbia and provide a no-obligation cost estimate.
What is District of Columbia LLC Domestication?
District of Columbia domestication is a statutory procedure that changes the jurisdiction that primarily governs an LLC.1 An out-of-state LLC that domesticates into the District changes its jurisdiction of formation—or domicile—to the District of Columbia. The LLC is still the same company, but after completing the domestication, it is a D.C. LLC governed by the District’s Uniform Limited Liability Act of 2010.2
Some states use the name conversion for the legal procedure that changes an LLC’s domicile. Those states typically allow LLCs to use the conversion process to change their domiciles or to change into another type of entity. The District has two separate procedures—domestication and conversion—each with its own purpose.
- An LLC domestication under District of Columbia law transfers an out-of-state LLC into the District or transfers an LLC formed in the District into another state.
- An LLC conversion under District of Columbia law changes an LLC into another entity type—such as a corporation—or changes another entity type into an LLC.3
Why Transfer an LLC to the District of Columbia?
The District of Columbia’s LLC domestication process is the easiest and least expensive way for most out-of-state LLCs to transfer to the District. A business owner in another state might want to move a business to D.C. for a variety of reasons.
- Owner convenience. A business owner who lives in the District may find that having the company governed by D.C. law is more convenient. A D.C. resident business owner may cut down on legal issues and have an easier time working with government offices if the business is a District of Columbia LLC. An owner may also want an LLC to be governed by D.C. law if the company does a substantial amount of its business with the federal government.
- Networking and hiring advantages. When business owners need professional assistance, they must find someone who is licensed and knowledgeable about the right jurisdiction. A District resident is more likely to find local attorneys, accountants, and other professionals who are familiar with the District’s business laws and regulations. Domesticating an out-of-state LLC may also enable in-person meetings with professionals and offer networking advantages for the owner.
- Simplified annual reporting. An out-of-state LLC that domesticates into the District of Columbia may reduce its annual reporting burden. When a business is formed in one jurisdiction and mostly operates in another, it usually must file annual reports in both. An LLC that transfers to the District might not have to file in its former state if it will not do further business there. The District also requires only biennial (every two years) reporting for LLCs.
- Legal benefits. A domestication into the District can be a good business decision if D.C. law has advantages for the company compared to the original state. Although the District is not considered a business-friendly jurisdiction, a company may still benefit if D.C. law is, for example, a better fit for the members’ preferred operating agreement terms.4
- Lower overall tax burden. Washington, D.C. is typically considered a high-tax jurisdiction and ranks among the bottom ten for business taxes. However, a transfer into the District may nonetheless save an LLC on taxes if the original state no longer taxes the business. A state must have a sufficient connection—or nexus—with a business to have the power to tax it. If the original state can no longer tax the company after the domestication, the business may see overall tax savings.
Need to find out what it will take to move your LLC to District of Columbia?
The District of Columbia domestication process depends on the requirements of two sets of state laws. We have developed a streamlined system to efficiently transfer LLCs to District of Columbia. Click the button below to get an overview of the process.
What are the Benefits of District of Columbia LLC Domestication?
There are multiple strategies for moving an existing LLC to a new jurisdiction. The District’s LLC domestication process—when it can be used—is the most streamlined approach for most companies. The domestication process’s advantages include:
- The LLC continues its same identity. The domesticated LLC is still considered the same company, and it keeps its same identity.5 This lets the LLC continue using its Employer Identification Number (EIN) and business identity for tax and administrative purposes.
- The company’s day-to-day business is not interrupted. The company keeps operating as normal during and after the domestication unless the members decide differently. Business offices can stay open, and the company can continue earning income.
- Domestication does not disturb employment relationships. A domestication into the District has no effect on the LLC’s employment relationships. Employees still work for the same company, so releasing and re-hiring staff after the domestication is unnecessary.
- The LLC’s business contracts are still valid. An LLC domestication into the District does not interrupt the LLC’s existing business agreements. The company continues contractual arrangements and still has all the same rights, duties, and obligations after the domestication.6
- The LLC need not transfer its assets. The domesticated LLC still owns all the same property the out-of-state LLC owned.7 There is no need to sign deeds in favor of the D.C. company or to create asset-assignment instruments transferring other property.
- The business avoids dissolution. The District of Columbia domestication process does not require dissolution of the out-of-state LLC in the current state.8 The company simply continues its existence as a D.C. LLC—avoiding the burdensome and intensive process for dissolving and winding up a company.
What LLCs Can Convert into District of Columbia LLCs?
Not all out-of-state LLCs are eligible for domestication into the District of Columbia. The domestication process is only possible if an LLC’s current and new jurisdictions both authorize LLC domestications. If the LLC’s current state has no statutory domestication procedure, the company cannot domesticate into the District.9 The current state may use the name conversion, as long as it allows an LLC to change its domicile to a new state.
An out-of-state LLC considering a D.C. domestication should also confirm that it can satisfy all D.C. laws and regulations that govern the company’s business. For example, an LLC formed to provide professional services—called a professional limited liability company or PLLC—must comply with the District’s rules governing the specific profession. A professional service under D.C. law is a personal service that only a licensed person can provide in the District.10 Professional services include (among others) law, accounting, architecture, and health professions.11
Need to find out whether District of Columbia LLC domestication is an option?
Our LLC Domestication Analyzer analyzes both District of Columbia law and the law of the state that the LLC is moving from. It can help you:
- Find out whether the LLC qualifies to convert to a District of Columbia LLC
- Get a detailed step-by-step breakdown of the domestication/conversion process based on the laws of both states
- Get a free, no-obligation estimate of the costs involved to move your LLC to District of Columbia
Click the button below for a free analysis.
How Much Does District of Columbia LLC Domestication Cost?
An out-of-state LLC that completes a domestication into the District of Columbia will incur domestication costs. The costs include labor costs, filing fees, and a commercial registered agent’s fee (if applicable).
- Labor costs. The labor costs a domesticating LLC incurs are amounts paid to the service provider the LLC hires to handle the domestication process. The service provider typically assists with planning the domestication, preparing domestication documents, and filing the documents with government filing offices. The service provider’s time will also include time spent communicating with the LLC members. A service provider’s total labor costs will vary between providers and may be a flat fee or an hourly rate.
- Filing fees. Filing offices that accept business filings in the District and in the LLC’s current state will charge filing fees for the domestication documents. The District’s Business and Professional Licensing Administration (part of the Department of Licensing and Consumer Protection) handles business filings. In many states, the secretary of state’s office handles business filings. The District’s fee amount for an LLC domestication is $220.00. The current state’s fee depends on the state from which the LLC is transferring.
- Commercial registered agent fees. An LLC formed in the District of Columbia must appoint a registered agent authorized to receive service of process, notices, and demands for the company.12 An LLC’s articles of organization must list the registered agent’s name and address—which must be a street address in the District.13 Although an LLC member or manager can be its agent, LLCs often choose to hire a commercial registered agent—an individual or entity in the business of serving as registered agent for business entities.14 A commercial registered agent can be helpful if an LLC lacks a D.C. address, or if the LLC wants a consistent, organized contact for receiving important communications.
Need a price quote?
Our LLC Domestication Analyzer includes a free, no-obligation estimate of the cost of moving your LLC to District of Columbia. Click the button below for a fee quote.
How Long Does District of Columbia LLC Domestication Take?
An LLC domestication into the District of Columbia can usually be completed more quickly than other methods of moving an out-of-state business to the District. The total time necessary to finish the process is the sum of the parties’ turnaround time for each step:
- The service provider’s time needed to gather necessary information and draft domestication documents;
- The members’ or managers’ time needed to review documents, request revisions if needed, and sign the documents; and
- The filing offices’ time needed to receive and process the domestication documents.
The District’s Business and Professional Licensing Administration typically processes online and mail filings within 15 business days—starting from when the filer’s payment clears the bank. Faster processing is possible for walk-in filers, but there is an additional expedited processing fee of $50.00 for 3-day service or $100.00 for same-day processing.
What Laws Govern District of Columbia LLC Domestication?
Domestication of an out-of-state LLC into the District must comply with D.C.’s domestication law and with the current state’s law.15 All aspects of the domestication process need to follow any relevant provisions of either states’ law. The District of Columbia’s domestication rules are described throughout this article and specifically govern the filing requirements and legal effects in the District.16 The current state controls:
- Whether an LLC domestication into the District is possible (the other state must authorize LLC domestications);17
- How the LLC’s members or managers approve the domestication;18
- What documents must be filed in the LLC’s current state and what information those documents must contain; and
- Any further requirements described in the current state’s domestication law.
D.C.’s domestication statute lists requirements for a domesticating LLC’s plan of domestication.19 The current state’s law will likely also have plan-of-domestication requirements. A domesticating LLC must ensure that its plan of domestication includes everything required by either state. In other words, any information required in one jurisdiction and not the other must still be included in the plan of domestication.
What is the District of Columbia LLC Domestication Process?
The District of Columbia LLC domestication process consists of two components: document preparation and administrative tasks.
A domesticating LLC must create several domestication documents that describe the terms of the domestication. Documents should be drafted carefully to ensure that both states’ requirements are met.
- Plan of Domestication. A Plan of Domestication that is designed to comply with the requirements of both District of Columbia law and the law of the state that the LLC is moving from.
- District of Columbia Articles of Domestication. The District of Columbia Articles of Domestication with all information and any related documents needed for filing with the District of Columbia Business and Professional Licensing Administration.
- Domestication Document for Filing in Prior State. Depending on state law, this document may be called articles of domestication, statement of domestication, articles of conversion, certificate of conversion, statement of conversion, certificate of conversion, or a similar term.20
- District of Columbia Articles of Organization. The District of Columbia Articles of Organization for filing with the District of Columbia Business and Professional Licensing Administration.
- District of Columbia Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as a District of Columbia LLC, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection.
- Resolution Authorizing Domestication. A resolution approving the transaction and adopting the District of Columbia organizational documents as the LLC’s governing documents.
Our District of Columbia LLC domestication service includes each of these documents, as well as explanatory letters and instructions, an operations manual, and related documents needed to complete the District of Columbia LLC domestication process. Click the button below to find out more.
After the domesticating LLC has prepared and approved its domestication document, it must next complete several administrative tasks to finalize the domestication.
- Conduct preliminary name search. Check the official records of the District of Columbia Business and Professional Licensing Administration to determine whether the LLC’s name is available in the District of Columbia. (If the name is unavailable, a slight name change may be required to complete the domestication.)
- Obtain Certificate of Good Standing. Request Certificate of Good Standing or equivalent document from the state agencies in the prior state.
- Obtain signatures on the Articles of Domestication. The Articles of Domestication must be signed by the required parties. The District of Columbia Business and Professional Licensing Administration allows the Articles of Domestication to be e-signed.
- Obtain signatures on the Articles of Organization. The Articles of Organization must be signed by the required parties. The Business and Professional Licensing Administration allows the Articles of Organization to be e-signed.
- File the Articles of Domestication. File the Articles of Domestication with the District of Columbia Business and Professional Licensing Administration. The Business and Professional Licensing Administration allows the Articles of Domestication to be e-filed.
- File the Articles of Organization. File the Articles of Organization with the District of Columbia Business and Professional Licensing Administration. The Business and Professional Licensing Administration allows the Articles of Organization to be e-filed.
- File domestication documents with prior state. File the domestication documents with the Secretary of State or equivalent agency for the state that the LLC is moving from.
These tasks are based on the system that we have developed to transfer an LLC from one state to another. We provide you with the option to save money by completing these tasks yourself (using the step-by-step instructions we provide) or hire us to handle everything for you. Click the button below to find out more.
What is the Legal Effect of District of Columbia LLC Domestication?
A District of Columbia LLC domestication officially transfers an out-of-state LLC into the District without disrupting the business’s existence or operations. The following legal effects of domestication promote continuity during and after the process.
- Consistent identity. The domesticated District of Columbia LLC is for all purposes the same company that existed in the other jurisdiction before the domestication.21 It continues the same tax-reporting history and can still use the same EIN.
- Same property. The domesticated LLC owns all the same real estate, personal property, and other assets that the out-of-state LLC owned before the domestication.22
- Same liabilities. Any debts, taxes, liabilities, or other legal or contractual obligations that the out-of-state LLC had before the domestication are now the D.C. LLC’s debts, liabilities, and obligations.23
- Legal cases carry on. Legal cases and proceedings involving the out-of-state LLC move forward as though the domestication into the District did not occur.24 If the domestication results in a name change, the company’s new name in the District can be substituted for the prior name.
- Contracts enforceable. The out-of-state LLC’s business agreements are still in effect and enforceable after the domestication. The District of Columbia LLC has all the same rights, obligations, and duties that the out-of-state LLC had before the domestication.25
- Ownership interests. The terms and conditions of the domestication—as described in the plan of domestication—take effect when the domestication is complete.26 The terms include a description of how interests in the out-of-state LLC will be treated. LLCs typically convert ownership interests from the original state into interests in the domesticated LLC—with members keeping the same voting rights and profit-and-loss distributions.27 Members may also agree to exchange ownership interests for cash, property, or other consideration.
- Non-dissolution. A domestication into the District does not require dissolution in the original state, and the out-of-state LLC is not treated as though it was dissolved.28 The company simply continues its existence as a District of Columbia LLC.
- D.C. Code § 29-809.06(a).
- D.C. Code §§ 29-801.01, et. seq.
- D.C. Code § 29-204.01.
- D.C. Code § 29-801.07.
- D.C. Code § 29-809.09(a)(1).
- D.C. Code §§ 29-809.09(a)(2)-(4).
- D.C. Code § 29-809.09(a)(2).
- D.C. Code § 29-809.09(a)(7).
- D.C. Code § 29-809.06(a).
- D.C. Code § 29-502.03(3).
- D.C. Code § 29-101.02(38).
- D.C. Code §§ 29-101.02(43); 29-104.02(1).
- D.C. Code § 29-104.03.
- D.C. Code § 29-104.05.
- D.C. Code § 29-809.06(a).
- See D.C. Code §§ 29-809.08(b); 809.09(a).
- D.C. Code § 29-809.06(a).
- D.C. Code § 29-809.07(a)(2).
- D.C. Code § 29-809.06(c).
- 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).
- D.C. Code § 29-809.09(a)(1).
- D.C. Code § 29-809.09(a)(2).
- D.C. Code § 29-809.09(a)(3).
- D.C. Code § 29-809.09(a)(4).
- D.C. Code §§ 29-809.09(a)(2), (3) and (5).
- D.C. Code § 29-809.09(a)(6).
- D.C. Code § 29-809.06(c).
- D.C. Code § 29-809.09(a)(7).