Move Your Company to Oregon

There are three ways to move a company from another state to Oregon. The first is that the owner can close down the company in the other state, then form a new company altogether here in Oregon. The second is that the owner can form a new company in Oregon, then merge the company in the other state into the new Oregon company. The third is that the owner can convert the company in the other state into a new Oregon company.

In this article I’ll explain how each of the three options typically works, and the positive and negative aspects of each option. For the sake of simplicity, I’ll use the example of a company owned by a single owner. I’ll also use the example of an LLC, as opposed to a corporation, because LLC’s are far more common these days. The process of moving a corporation is similar, but it’s not exactly the same. From a general perspective, keep in mind that companies can move from state to state because companies are formed at the state, and not the federal, level.

Option 1: Close Down Your Old Company and Start Over

Under this first option, the owner closes down his or her company in the other state by filing articles of dissolution with the secretary of state (or whatever that state calls its version of articles of dissolution). If any taxes are owed to the state, they typically must first be paid before the state allows the articles of dissolution to be filed. The owner may also need to create a plan of liquidation, which explains how the company will wind up its business, pay its remaining liabilities, collects its assets, and distribute any remaining property to the owner. This includes closing down any business accounts, including company bank accounts. 

Depending on the state that the owner is leaving, the owner may need to make filings with various other state or local agencies, including taxing authorities. At the federal level, the owner will need to file its final tax return with the IRS.

The effect of taking all of the steps mentioned in the previous paragraphs is that the company goes out of business. It will no longer be permitted to operate, will not be able to use its employer identification number (the “EIN”), and will lose whatever value it has created prior to going out of business, such as value in its brands, property (including intellectual property such as trademarks), and goodwill. It’s effectively a full stop.

The benefits under this option include that the business owner can start fresh with a clean slate, including from a credit perspective, and that the owner can open up the new Oregon company as quickly as he or she wants to do so, even while closing down the company in the other state. This is because the two companies will be independent of each other, while under options 2 and 3, as you’ll see below, the company in the other state continues its existence as an Oregon company. That said, we don’t often see business owners choosing this option because they prefer to keep the company in existence and not have to fully wind down operations only to start all over again in Oregon.

Option 2: Merge Your Old Company into an Oregon Company

Under this second option, the owner forms a new company in Oregon by first filing articles of organization with the Oregon Secretary of State’s office, then filing articles of merger with the same office. From there, the owner creates an agreement and plan of merger, which is the contract between the new Oregon company and the old company that sets forth the terms of the merger, and then the owner makes the appropriate filings in the other state. Those filings depend on the state that the owner is leaving. Using California as a example, the owner would file a certificate of merger, along with a consent to service of process, with the California Secretary of State’s office if he or she were to merge a California LLC into an Oregon LLC.

The benefits under this option are that, at the federal level, the company continues to exist — it can continue to use the same EIN, and need not apply for a new one — the company preserves its value in its property, brands, and goodwill, and need not terminate its pending contracts (unless those contracts have clauses preventing them from being assigned to a new entity), and generally can keep its same accounts, including bank accounts (this depends on the bank the company uses).

The negative aspects of this option include the need to set up a new company in Oregon and draft additional documents and make additional filings that aren’t required when converting the company, which I’ll explain in option 3, below. But, sometimes conversions aren’t permitted, so a merger is necessary. Conversions are only permitted when the laws of the state that the owner is leaving allow for companies to be converted out of that state and into a new state.

Option 3: Convert Your Old Company into an Oregon Company

This third option is the simplest and most straightforward because the owner need not wind down and dissolve the company (option 1) and need not create an entirely new company in Oregon (option 2). Instead, the owner need only file articles of conversion with the Oregon Secretary of State’s office and with the secretary of state’s office in the state the owner is leaving, along with drafting a plan of conversion and signing any related internal consents. The owner may also consider updating the company’s operating agreement, to reflect that the company is now an Oregon LLC. 

Depending on the state that the owner is leaving, he or she may need to get tax clearance before the company can full extricate itself from that state. How to get tax clearance depends on the state the owner is leaving. One particularly awful state, as far as obtaining tax clearance goes, is Pennsylvania. If you are trying to convert your company out of Pennsylvania, good luck to you.

Similar to option 2, at the federal level, the IRS considers the company to be the exact same company as it was when registered in the previous state, and the owner need not obtain a new EIN. So, like option 2, conversion is seamless at the federal level.

Overall, if you want to move your company to Oregon, and conversion is an option, that’s likely going to be your first choice. Whether it’s an option will depend on the laws of the state you are leaving. If conversion is not an option, then consider whether you’ll want to keep the company’s EIN, brands, accounts, and goodwill. If so, consider leaning towards option 2. If not, then consider option 1.