Small businesses may consider moving their companies to new states for several reasons. It could be to find new markets, funding opportunities, lower taxes, or better incentives for small businesses. Whatever the motivation, moving your business to a new state has its fair share of challenges that you need to consider before making a move.
Moreover, the costs of moving to a new state can be prohibitive, especially in the short term. As a small business owner, you can consider available loan options such as loans for immigrants, ITIN loans, or other small business loans to finance your relocation to a new state.
Things You Need To Consider Before Moving
1. Conduct market research
A lower tax burden is excellent motivation to move into a new state. However, that alone isn’t sufficient justification for moving. Research the new state and the new location to ensure there’s existing and adequate demand for your products or services. Check out how competitors are fairing in the place before moving. If the business is booming, you can fancy chances of success. If they’re barely making it, you’ll want to be more cautious and calculative.
2. Plan early for the move
Research your new location months ahead of your move. Work with a commercial realtor in the locality to identify an ideal spot for your business. Link up with a local accountant to learn more about tax incentives in the state. Sample the costs of various commercial movers to determine your moving budget.
With a clear budget, you can approach financiers for funding options such as loans for immigrants.
3. Marketing plan
The change in business location may lead to the loss of customers, especially for a brick-and-mortar shop. Therefore, you’ll need a marketing plan to acquire new customers when you move to the new state.
Think of local marketing campaigns such as an impactful local SEO strategy, running ads in the local media, and participating in the local Chamber of Commerce.
Not every employee will be willing to move to the new state with you. Some who do may also require assistance to move to the new state. That’s an extra cost for your business. Therefore, you’ll need to source fresh talent to plug in any human capital gaps in your industry.
Consider working with local hiring agencies in sourcing talent in your new location. If you’re moving into a state with lower saturation of talent, it will be more challenging to get the right talent.
Moving can be a blessing in disguise by presenting you the opportunity to replace expensive talent with younger, cheaper talent. Remember to be humane and within the law when planning to disengage with your old employees by giving sufficient notice, where possible.
Aspects To Take Into Account During The Process
Nevada, South Dakota, Alaska, and Texas are examples of states without capital gains tax. As you move, check up the level of taxation in the state you’re moving into. Fewer taxes translate to more money in your business.
Before shifting to your new location, you’ll need to update your records with the IRS on your new business address. Make a plan of paying outstanding state income taxes and fees.
Lastly, keep track of your business relocation costs by safeguarding the receipts. If you’re eligible, you can deduct moving costs from your taxes.
Depending on the type of business ownership, moving a business has varying levels of complexity. It’s simpler for sole proprietorships and partnerships and more sophisticated for corporations or LLCs.
Sole proprietorships or partnerships can cancel licenses or permits and apply for new ones in the new state.
LLCs, on the other hand, can opt to:
- Register your small business as a “Foreign Company” in the new selected area.
- Set up a new company in the state you’re going to. The company purchases the assets and liabilities of the old company.
- Set up a company that merges its operations with the old one.
Financing Your Business Moving To A New State
On average, moving a business across states costs $4,890. Here are a few financing options you could consider:
- Venture capitalists
- Commercial lenders who offer several types of loans, such as loans for immigrants
- Crowdfund sourcing
- Angel investors
Moving your small business to another state is a costly and daunting task. We’ve highlighted some key areas to consider to make it seamless. Apply for financing now to actualize your moving plans.