How to Move an LLC to Pennsylvania

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

What is Pennsylvania LLC Domestication?

Pennsylvania domestication is a legal transaction that changes an LLC’s state of organization—the state whose law primarily governs the company.¹ An out-of-state LLC—also called a foreign LLC—that domesticates to Pennsylvania becomes a Pennsylvania LLC governed by the Pennsylvania Uniform Limited Liability Company Act of 2016.² The LLC is otherwise the same business entity before and after the domestication process.³

Some states use the name conversion for the legal procedure that changes an LLC’s state of organization—also called its domicile. In many of those states, a business can complete a conversion to change its domicile or to change its entity type. The same statutory process can accomplish either goal.

Pennsylvania has two distinct procedures for LLCs. A Pennsylvania LLC domestication changes a company’s domicile only. A conversion changes a business from one entity form to another.⁴ For example, a Pennsylvania corporation might convert to an LLC. This article deals with domestications that change an out-of-state LLC into a Pennsylvania LLC.⁵

Why Transfer an LLC to Pennsylvania?

A Pennsylvania LLC domestication may make sense if a business owner moves to Pennsylvania or if the owners prefer to have Pennsylvania law govern the company. An owner might transfer an LLC to Pennsylvania for any of the following reasons:

• Convenience. Owners who move to Pennsylvania may find that it is more convenient for the LLC to be primarily governed by the jurisdiction where the owners live.
• Reduced reporting. Pennsylvania does not require LLCs (other than restricted professional LLCs) to file annual reports. Instead, Pennsylvania LLCs submit a decennial filing every ten years in years that end in “1.” An LLC that domesticates to Pennsylvania and no longer has to file in the original state will avoid the time and expense of annual filings.
• Tax savings. A business can reduce its overall tax bill by limiting the number of states in which it must pay taxes. Domestication to Pennsylvania may let an LLC avoid taxation by the original state if it results in an insufficient connection—or taxable nexus—between the state and the business. Pennsylvania usually ranks about average in state business tax rankings but compares favorably to other states in the Northeast.
• Legal advantages. A Pennsylvania LLC domestication might be a wise business decision if Pennsylvania law offers advantages over other states. For example, Pennsylvania may have a more flexible system for LLC management or profit distribution than the original state. Pennsylvania also has multiple tax-credit and grant programs for businesses involved in certain fields.
• Easier hiring of professionals. Legal systems and tax rules are mostly state-specific. A business that needs an accountant, lawyer, or other professional needs someone familiar with the right state’s law. Domesticating an out-of-state LLC to Pennsylvania can help owners who live in Pennsylvania more easily find local professionals with the right expertise.

What are the Benefits of Pennsylvania LLC Domestication?

Pennsylvania LLC domestication is a streamlined process that minimizes disruptions to the business’s ordinary activities. The company expends substantially less time and money on administrative matters compared to other methods for changing a business’s state of domicile. Benefits of the domestication process include:

• Day-to-day operations continue as normal. An LLC does not have to stop doing business during the domestication process. Domestication occurs “behind the scenes” and need not affect the public-facing part of the business.
• The business’s identity is consistent. The LLC keeps its essential identity and remains the same company during and after domestication.⁶ It is still the same taxpayer with the same Employer Identification Number. The consistency avoids needless administrative tasks and potential confusion.
• Contracts remain effective. The LLC’s contracts from before the domestication are still valid and enforceable after domestication. The LLC keeps the same contractual rights and obligations.⁷ Employment relationships are also unaffected, so there is no break in the business’s employment of its employees.
• Assets and liabilities stay the same. A domesticating LLC keeps all its same assets. There is no need to close bank accounts and open new ones.⁸ Deeds, assignments, and other transfer documents are also unnecessary. The LLC also owes all the same debts and taxes that it owed before domestication.⁹
• Filings in the original state are limited. A domesticating LLC files the original state’s equivalent of the statement of domestication, but filings in that state are otherwise limited. Domestication does not require the company to be dissolved in the original state—which avoids a complex, time-consuming process.¹⁰ Registration as an out-of-state (or foreign) business in the original state is also not essential. The company can register as a foreign LLC in the original state (if it will still do business there). But it does not have to.

What LLCs can Convert to Pennsylvania LLCs?

An LLC considering domestication to Pennsylvania must confirm that it is eligible for the process. The principal requirement is that the current state must authorize LLC domestications.¹¹ Not all states do. The current state may call the process domestication, conversion, or another name. The important part is that the state must have a statutory procedure that lets an LLC organized in that state change its domicile to a new state.

An out-of-state LLC must also confirm that Pennsylvania lets LLCs engage in the company’s field of business. Pennsylvania allows most business areas other than acting as an insurance company.¹² Some states prohibit LLCs from providing professional services—which are services that require a license or comparable authorization.¹³ Pennsylvania recognizes professional companies—LLCs that provide professional services. Professional companies are subject to additional legal requirements.

An out-of-state LLC must also confirm that its area of business is lawful in Pennsylvania in general. If Pennsylvania prohibits the type of business in which the company is engaged, it should not domesticate to Pennsylvania.

How Much Does Pennsylvania LLC Domestication Cost?

Pennsylvania charges filing fees of $195.00 for out-of-state LLCs domesticating to Pennsylvania. The amount includes $70.00 for the statement of domestication and $125.00 for the attached certificate of organization. By comparison, Pennsylvania’s filing fee for registering an out-of-state LLC in Pennsylvania is $250.00.

An out-of-state LLC that domesticates to Pennsylvania will also incur labor costs and (if applicable) registered office fees.

Labor Costs

The labor costs are the amounts charged by the service provider the LLC retains to manage the Pennsylvania domestication. Service providers may charge a flat fee or charge by the hour—with fee amounts varying by provider. Work that goes into a domestication includes:

• Obtaining and organizing information;
• Drafting the domestication documents;
• Communicating with the business owners and state agencies (Dept. of State in Pennsylvania); and
• Filing domestication documents with state agencies.

Registered Office Fees

A domesticating LLC will incur registered office fees if it elects to hire a commercial registered office provider. Pennsylvania law does not require LLCs to appoint a registered agent to accept service for the company, as in most states. Instead, Pennsylvania requires LLCs to designate a registered office in Pennsylvania where service on the LLC may be delivered.¹⁴

A business can hire a commercial registered office provider to serve as its Pennsylvania registered office.¹⁵ Hiring a commercial registered office provider can be a good option for an LLC without a Pennsylvania location. They also help keep official communications consistent and organized. The fee is typically around $100.00 to $200.00 per year.

How Long Does Pennsylvania LLC Domestication Take?

A Pennsylvania LLC domestication proceeds in several steps. The length of the process depends on how long each step takes. Each step depends on the responsible person’s turnaround time:

• The business owners’ time to organize the necessary information;
• The service provider’s time to review the information and prepare the domestication documents;
• The owners’ time to approve and sign the draft documents (or request revisions);
• The service provider’s time to file the final domestication documents with state agencies; and
• The state agencies’ time to accept and process the filed documents.

The Pennsylvania Department of State suggests allowing 15 days for filed documents to be processed.

What Laws Govern Pennsylvania LLC Domestication?

An out-of-state LLC that domesticates to Pennsylvania must comply with both Pennsylvania law and the current state’s law. As described further in this article, Pennsylvania law controls the process and documents filed in Pennsylvania and determines the domestication’s legal effects. The current state’s law governs:

• Whether the LLC can domesticate to Pennsylvania (the state must authorize domestication);¹⁶
• The content of the written plan of domestication (if required);
• The standard under which the LLC’s members or managers must approve the plan of domestication;¹⁷ and
• The effective date for the domestication.¹⁸

What is the Pennsylvania LLC Domestication Process?

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

Document Preparation

An LLC domesticating to Pennsylvania prepares and adopts several domestication documents that must satisfy both states’ requirements. The domestication documents memorialize the terms of the domestication and control the company when the domestication takes effect.

• Plan of Domestication. A Plan of Domestication that is designed to comply with the requirements of both Pennsylvania law and the law of the state that the LLC is moving from.
• Pennsylvania Statement of Domestication. The Pennsylvania Statement of Domestication with all information and any related documents needed for filing with the Pennsylvania Department of State’s Bureau of Corporations and Charitable Organizations.
• 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.¹⁹
• Pennsylvania Certificate of Organization. The Pennsylvania Certificate of Organization for filing with the Pennsylvania Department of State’s Bureau of Corporations and Charitable Organizations.
• Pennsylvania Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as a Pennsylvania 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 Pennsylvania organizational documents as the LLC’s governing documents.

Administrative Tasks

The LLC completes the domestication by carrying out several administrative tasks to implement the domestication.

• Conduct preliminary name search. Check the official records of the Pennsylvania Department of State’s Bureau of Corporations and Charitable Organizations to determine whether the LLC’s name is available in Pennsylvania. (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 Pennsylvania Bureau of Corporations and Charitable Organizations 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 Bureau of Corporations and Charitable Organizations allows the Certificate of Organization to be e-signed.
• File the Statement of Domestication. File the Statement of Domestication with the Pennsylvania Department of State’s Bureau of Corporations and Charitable Organizations. The Bureau of Corporations and Charitable Organizations allows the Certificate of Organization to be e-filed.
• File the Certificate of Organization. File the Certificate of Organization with the Pennsylvania Bureau of Corporations and Charitable Organizations of the Department of State. The Pennsylvania Bureau of Corporations and Charitable Organizations allows the Statement of Domestication 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 Pennsylvania LLC Conversion?

Pennsylvania LLC domestication moves an out-of-state LLC to Pennsylvania. The company otherwise continues its existence as the same entity with the same date of formation.²⁰ Pennsylvania law declares that the legal effects of a domestication to Pennsylvania are as follows:

• Governing law. After domestication, the LLC is now a Pennsylvania LLC governed by the Pennsylvania Uniform Limited Liability Company Act.²¹ Pennsylvania courts have jurisdiction over the domesticated company.²² The LLC’s Pennsylvania certificate of organization and operating agreement are effective and are binding on the company and its members.²³
• Assets and liabilities. The LLC still owns all the same property it owned before domestication. There is no need to sign deeds or assignments to transfer its assets.²⁴ The company also owes all the same debts and taxes that it owed before domestication.²⁵ Domestication does not affect any liability members have or do not have for the LLC’s obligations.²⁶
• Contracts. Any contracts involving the company are still valid and effective after domestication. The Pennsylvania LLC keeps all contractual rights and obligations from before the domestication.²⁷
• Court cases. Any legal cases or administrative proceedings in which the LLC is involved continue uninterrupted. If the company’s name changes as part of the domestication, the new name is simply substituted for the old name.²⁸
• Company ownership. A member who owned an interest in the out-of-state LLC before domestication continues to own the same interest in the Pennsylvania LLC—except to the extent the plan of domestication provides differently.²⁹
• No dissolution. Domestication does not formally terminate the LLC in the original state. Dissolution, liquidation, and winding up affairs are unnecessary. Domestication does not trigger contractual rights that take effect in the event of dissolution, liquidation, or winding up.³⁰

1. 15 Pa.C.S. § 371(a).
2. 15 Pa.C.S. §§ 8811, et. seq.
3. 15 Pa.C.S. § 376(a)(1).
4. 15 Pa.C.S. § 351.
5. Pennsylvania’s domestication process can also change a Pennsylvania LLC to a foreign LLC. 15 Pa.C.S. § 371(b).
6. 15 Pa.C.S. § 376(a)(1).
7. 15 Pa.C.S. § 376(a)(4).
8. 15 Pa.C.S. § 376(a)(2).
9. 15 Pa.C.S. § 376(a)(3) and (h).
10. 15 Pa.C.S. § 376(b).
11. 15 Pa.C.S. § 371(b).
12. 15 Pa.C.S. § 8818(b).
13. 15 Pa.C.S. § 102.
14. 15 Pa.C.S. § 8825.
15. 15 Pa.C.S. § 109.
16. 15 Pa.C.S. § 371(b).
17. 15 Pa.C.S. § 373(b).
18. 15 Pa.C.S. § 375(f).
19. 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).
20. 15 Pa.C.S. § 376(a)(1).
21. 15 Pa.C.S. § 376(a)(1).
22. 15 Pa.C.S. § 376(c).
23. 15 Pa.C.S. § 376(a)(6) and (9).
24. 15 Pa.C.S. § 376(a)(2).
25. 15 Pa.C.S. §§ 376(a)(3) and (h).
26. 15 Pa.C.S. § 376(e).
27. 15 Pa.C.S. §§ 376(a)(3)-(4).
28. 15 Pa.C.S. § 376(a)(5).
29. 15 Pa.C.S. § 376(a)(10).
30. 15 Pa.C.S. § 376(b) and (e).