The fitness industry is currently experiencing a surge of activity, with numerous gym owners either buying or selling their businesses. More often than not, gym owners are selling their gyms through a process known as an asset purchase. If you’re contemplating selling your gym due to a move to another state, and your are only selling the assets, you may wonder what to do with your LLC afterward.
Why Keep Your LLC When Selling Your Gym
Selling your gym’s assets doesn’t necessarily mean you have to dissolve your LLC. What if you want to open a new business, maybe a new gym, after you move? There is a process called “redomestication” through which you may be able to literally move your LLC from one state to another. There are advantages to keeping your LLC and redomesticating it to the state you’re moving to:
- Continuity of Business Identity: An existing LLC has a business history, reputation, and credit rating that can be advantageous for any future ventures.
- Ease of Business Transactions: An LLC in good standing facilitates easier business bank account openings, loan applications, and other financial transactions.
- Limited Liability: The personal liability protection that an LLC offers remains intact when you redomesticate.
- Tax Benefits: Different states have varying tax laws. Redomesticating allows you to take advantage of favorable tax conditions without starting anew.
- Streamlined Administrative Work: Redomestication usually involves less paperwork, time, and expense compared to creating a new LLC.
Steps to Redomesticate an LLC
Redomesticating an LLC involves multiple steps, each requiring careful consideration:
- Research the Laws: The first step is to understand the laws pertaining to business entities in your current state and the state you intend to move to. It’s essential to know whether both jurisdictions permit redomestication, as not all states allow this.
- Consult State Agencies: The next step usually involves consulting the Secretary of State’s office or its equivalent in both the originating and the destination state to understand the specific requirements and procedures for redomestication.
- Draft and File Documents: This involves preparing and filing the necessary paperwork required for redomestication in both states, including Articles of Organization, Operating Agreements, and other requisite forms.
- Obtain Approvals: If your LLC has multiple members, secure their approval for the redomestication as specified in your Operating Agreement. This often involves obtaining either a majority or supermajority vote from the members.
- Tax Compliance: It’s crucial to consult a tax advisor to understand the tax implications of redomestication, ensuring that you’re in good standing with tax agencies in both states.
- Notify Stakeholders: Inform all interested parties such as creditors, clients, and suppliers of your move.
- Execute the Move: This step involves formally closing your LLC in your original state and opening it in the new state. Be sure to follow all legal and procedural requirements to the letter.
- Update Contracts and Agreements: With your LLC now domiciled in a new state, all existing contracts, leases, and other agreements may need to be revised to reflect the change.
- Ongoing Compliance: Once the redomestication is complete, you’re responsible for annual reporting, fees, and any other compliance requirements in your new jurisdiction.
Call to Action
If you’re contemplating selling your gym’s anssets and moving to another state, consider the long-term benefits of keeping your existing LLC and redomesticating it. Our legal consulting firm specializes in helping gym owners with such intricate legal maneuvers, ensuring a smooth transition for your business.
Don’t leave your LLC’s future to chance. Reach out to us today for assistance in navigating the complexities of redomestication or any other legal needs you may have.
