How to Move an LLC to Connecticut

There are many reasons why a business owner may want to move an LLC to Connecticut. This article discusses the use of domestication, known in some states as LLC conversion, to transfer an LLC to Connecticut.

What is Connecticut LLC Domestication?

Connecticut LLC domestication is a statutory procedure that allows an LLC currently organized in another state—an out-of-state LLC or foreign LLC—to officially move to Connecticut.¹ The domestication process changes the company’s domicile—the state in which it is organized—to Connecticut. After completing the domestication, it is then a Connecticut LLC and is primarily governed by Connecticut’s Uniform Limited Liability Company Act.²

Some states call the legal process for changing an LLC’s domicile a conversion. Connecticut uses the name conversion for a similar procedure that changes an LLC’s entity type.³ A Connecticut LLC might convert to a corporation (or vice versa), for example.

The conversion process in some states can change an LLC’s domicile or its entity type. Connecticut has separate procedures for changing domicile (domestication) and entity type (conversion).

Why Transfer an LLC to Connecticut?

A Connecticut LLC domestication can be a useful tool for an LLC owner who is relocating to Connecticut or an owner who simply wants Connecticut law to govern the entity. Common reasons for a domestication include:

• Owner convenience. An LLC domestication may be convenient for an owner who relocates to Connecticut. Administration of the business may be easier if it is governed by the state where the owner lives. It may also be more convenient to work with state agencies closer to the owner’s home.
• Decreased filing. An LLC that mostly does business in Connecticut but is organized in another state may need to file annual reports in both states. The business could reduce its annual reporting and fee requirements by changing its domicile to Connecticut if it no longer needs to file in the original state.
• Reduced taxes. An out-of-state LLC that mostly does business in Connecticut may be able to reduce its tax burden by domesticating to Connecticut. A state has the legal power to tax a business if there is a sufficient connection—called a taxable nexus—between the business and the state. An LLC may be outside the original state’s taxing authority if domestication to Connecticut removes the company’s taxable nexus with the former state. Thus, domestication may let the company avoid being taxed by multiple states.
• Improved legal framework. An out-of-state LLC that domesticates to Connecticut is governed by Connecticut law after the domestication. A Connecticut LLC domestication can be a good business decision if Connecticut law is a better fit for the company’s business plan or the members’ ownership or management arrangement.
• Networking benefits. A business owner in Connecticut can find reliable professionals more easily if the business is governed by Connecticut law. Local lawyers and accountants, for example, are more likely to be familiar with Connecticut’s business and tax rules. On the other hand, an owner will have a harder time finding professionals in Connecticut with expertise in another state’s laws.

What are the Benefits of Connecticut LLC Domestication?

The advantage of the domestication process over other methods of changing states is that domestication involves minimal business disruption. Benefits of domestication include:

• Business identity. An LLC that domesticates to Connecticut is the same entity before, during, and after domestication.⁴ It continues the same tax identity and can still use the same Employer Identification Number (EIN).
• Accounts. There is no need to open or close bank accounts as a result of domestication. The LLC can open new accounts with a Connecticut-based bank, but it does not have to.
• Employment relationships. Because the LLC remains the same entity with the same EIN, domestication has no effect on existing employment relationships. Employees still work for the same company, so firing and re-hiring is unnecessary.
• Operations. The business’s day-to-day operations continue uninterrupted throughout the domestication process. Business contracts are still valid and effective, so there is no need to renegotiate agreements with suppliers, vendors, or other third parties.
• No dissolution. Domestication does not involve dissolution of the LLC. Business agreements sometimes have provisions that automatically terminate the contract if one of the parties begins winding up affairs or dissolves. Domestication does not trigger those provisions.
• No registration as a foreign LLC. An out-of-state LLC that domesticates to Connecticut need not register as a foreign LLC in the current state unless the company will continue doing business in that state.

What LLCs Can Convert to Connecticut LLCs?

Not every LLC can successfully domesticate into Connecticut. An out-of-state LLC that wishes to domesticate to Connecticut must satisfy two requirements.

The LLC’s Current State Authorizes LLC Domestication

Not all states allow LLCs to domesticate to another state. A Connecticut LLC domestication is only possible if the LLC’s current state has a legal procedure for changing an LLC’s domicile.⁵ The other state may call the procedure domestication or conversion, but it must have a law that allows LLCs to officially move to a new state.

The Company’s Business is Allowed for Connecticut LLCs

An out-of-state LLC domesticating to Connecticut must engage only in business that Connecticut allows for LLCs. A company involved in business that is unlawful in Connecticut—or that is not allowed for Connecticut LLCs—cannot successfully domesticate to Connecticut.

A Connecticut LLC cannot be any of the following:

• A Connecticut bank;
• A telegraph company;
• A gas, electric, or electric distribution company;
• A water company;
• A cemetery corporation; or
• Any other company (except a telephone company) that requires the right to take and condemn lands or to occupy public highways in Connecticut.⁶

Connecticut law allows a Connecticut LLC to act as an insurance company, surety, or indemnity company under limited circumstances.⁷

Before starting the Connecticut LLC domestication process, an out-of-state company should verify that its business is legal in Connecticut and can be engaged in by LLCs.

Connecticut Professional Limited Liability Companies

Some states—such as California—do not allow LLCs to provide professional services—which generally means services that a professional must have a license or equivalent legal authorization to provide.⁸ Connecticut lets LLCs provide professional services only if:

• The company’s name identifies it as a “professional limited liability company” or “PLLC;”
• Each member has the required license (or equivalent authority);
• The company provides services in Connecticut only through members with the necessary Connecticut licenses; and
• The company offers only one specific type of professional service—subject to an exception for LLCs with members who provide two or more healthcare-related services.⁹

An out-of-state LLC that provides services that meet Connecticut’s definition of professional services should confirm that it holds all required licenses and satisfies all of Connecticut’s other requirements before domesticating as a Connecticut PLLC.

How Much Does Connecticut LLC Domestication Cost?

An out-of-state LLC that domesticates to Connecticut will incur labor costs, filing fees, and (in some cases) registered agent fees. The total cost for an LLC domestication depends on the provider the LLC hires and the state from which the LLC is moving.

• Labor costs. The LLC’s labor costs are the amounts charged by the service provider that the LLC hires to handle the domestication. The work that goes into an LLC domestication includes information gathering, document preparation, communication with business owners and state agencies, and filing of documents. Total labor costs vary by provider and may be a flat fee or an hourly rate.
• Filing fees. A domesticating LLC must pay filing fees to the Connecticut Secretary of State and to the current state’s equivalent office. Connecticut’s total filing fees for an LLC moving to Connecticut is $220.00. That amount includes $100.00 for the Statement of Domestication and $120.00 for the Certificate of Organization. The current state’s filing fee depends on the LLC’s pre-domestication domicile. Fees in most states are higher for domestications into the state than for domestications out of the state.
• Registered agent fees. Connecticut requires LLCs to appoint a registered agent with authority to accept service for the company. An LLC’s registered agent must have a place of business in Connecticut.¹⁰ A member or manager who lives in Connecticut can act as registered agent. However, an agent’s name and residence address are listed with the secretary of state, so LLCs often hire commercial registered agents for privacy reasons. Commercial registered agents also help keep legal process organized and consistent. Commercial registered agents’ fees are typically around $100.00 to $200.00 per year.

How Long Does Connecticut LLC Domestication Take?

The LLC domestication process involves multiple steps. The timeframe for a domestication depends in large part on how long the parties take to complete each step. The total time includes time needed for:

• Members or managers to provide necessary information to the service provider;
• The service provider to review the information and prepare the required documents;
• Members or managers to review and sign the documents;
• The service provider to file the signed documents with state agencies; and
• The Connecticut Secretary of State’s office and the current state’s equivalent office to process the documents.

What Laws Govern Connecticut LLC Domestication?

Domestication of an out-of-state LLC to Connecticut is governed by both Connecticut law and the current state’s law. The domestication process must be carried out in compliance with both states’ domestication laws.

Connecticut law governs the process and documents filed in Connecticut and the legal effects of the domestication—as described in this article. The current state’s law controls the following issues:

• Whether domestication of the out-of-state LLC to Connecticut is possible;¹¹
• What topics the plan of domestication must address;¹²
• How the out-of-state LLC must approve the plan of domestication;¹³ and
• What documents must be filed with the current state to complete the domestication.

What is the Connecticut LLC Domestication Process?

The Connecticut LLC domestication process consists of two components: document preparation and administrative tasks.

Document Preparation

An LLC domesticating to Connecticut must prepare several documents describing the domestication. The list below identifies the necessary documents and indicates whether filing is required for each.

• Plan of Domestication. A Plan of Domestication that is designed to comply with the requirements of both Connecticut law and the law of the state that the LLC is moving from.
• Connecticut Statement of Domestication. The Connecticut Statement of Domestication with all information and any related documents needed for filing with the Secretary of State’s Business Services Office.
• 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.¹⁴
• Connecticut Certificate of Organization. The Connecticut Certificate of Organization for filing with the Secretary of State’s Business Services Office.
• Connecticut Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as a Connecticut 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 Connecticut organizational documents as the LLC’s governing documents.

Administrative Tasks

The LLC formally approves the domestication and related documents and implements the transfer to Connecticut by completing the administrative tasks described below:

• Conduct preliminary name search. Check the official records of the Secretary of State’s Business Services Office to determine whether the LLC’s name is available in Connecticut. (If the name is unavailable, a slight name change may be required to complete the domestication.)
• Obtain signatures on the Statement of Domestication. The Statement of Domestication must be signed by the required parties. The Secretary of State’s Business Services Office allows the Statement of Domestication to be e-signed.
• Obtain signatures on the Certificate of Organization. The Certificate of Organization must be signed by the required parties. The Secretary of State’s Business Services Office allows the Certificate of Organization to be e-signed.
• File the Statement of Domestication. File the Statement of Domestication with the Secretary of State’s Business Services Office. The Business Services Office allows the Statement of Domestication to be e-filed.
• File the Certificate of Organization. File the Certificate of Organization with the Secretary of State’s Business Services Office. The Business Services Office allows the Certificate 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.

What is the Legal Effect of Connecticut LLC Conversion?

The Connecticut LLC domestication process moves an out-of-state LLC to Connecticut with minimal disruption to the company’s day-to-day business. The process’s legal effects are designed to allow steady operations throughout the domestication.

• Business identity. The company remains the same entity before, during, and after the domestication.¹⁵ It has the same EIN and taxpayer history.
• Governing law. The LLC begins the domestication governed by another state’s law and ends as a Connecticut LLC governed by Connecticut’s Uniform Limited Liability Company Act. The new Connecticut certificate of organization and operating agreement bind the company and its members after domestication.¹⁶
• Company assets and liabilities. The LLC owns all of the same property and other assets after domestication that it owned before domestication.¹⁷ There is no need to prepare deeds, assignments, or other documents transferring assets. The LLC also owes all the same debts and other liabilities.¹⁸
• Contracts. The Connecticut LLC remains a party to all contracts that were in place entering the domestication—with the same contractual rights and duties.¹⁹
• Legal proceedings. Any legal actions or administrative proceedings in which the LLC is involved are not affected by the domestication. If the company’s name changes, it can simply substitute the new name for the old name.²⁰
• Ownership interests. Members’ ownership interests in the out-of-state LLC become ownership interests in the Connecticut LLC in the same proportion—unless the members agree otherwise in the plan of domestication.

1. CT Gen. Stat. § 34-641(c).
2. CT Gen. Stat. §§ 34-243 – 290, et. seq.
3. CT Gen. Stat. § 34-631(a).
4. CT Gen. Stat. § 34-646(a)(1).
5. CT Gen. Stat. § 34-641(c).
6. CT Gen. Stat. §§ 34-243h(b)-(f).
7. See CT Gen. Stat. § 34-243h(g). A Connecticut LLC can be an insurance company, surety, or indemnity company only if (i) the LLC is an affiliate of an insurance company formed in Connecticut; (ii) the LLC has a license from the Connecticut Insurance Commissioner; and (iii) the insurance commissioner has issued a certificate authorizing the LLC’s formation.
8. See CT Gen. Stat. § 34-243a(24). Connecticut law includes an extended list of qualifying professions—including (among others) physicians and physician assistants, attorneys, engineers, real estate brokers, CPAs, and naturopaths.
9. CT Gen. Stat. §§ 34-243h(c)-(e).
10. CT Gen. Stat. § 34-243n.
11. CT Gen. Stat. § 34-641(c).
12. See, e.g., CT Gen. Stat. § 34-642 (listing requirements for Connecticut LLC’s plan of domestication to another state).
13. CT Gen. Stat. § 34-643(b).
14. 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).
15. CT Gen. Stat. § 34-646(a)(1).
16. CT Gen. Stat. §§ 34-646(a)(6) and (8).
17. CT Gen. Stat. § 34-646(a)(2).
18. CT Gen. Stat. § 34-646(a)(3).
19. CT Gen. Stat. §§ 34-646(a)(2)-(4).
20. CT Gen. Stat. § 34-646(a)(5).