taking over active LLC- Transferring KY to TN

[vintage_Car]

New to the forum, but looking for some insight. 2 owners are retiring and I have been given the opportunity to buy the company. It is currently a KY based LLC with 2 owners. I live in TN and would like to work from my home to start with, but will also retain a part-time employee from KY who will also work from home. I want to keep the name the same and the LLC if that is possible. Where do I start, because I am sort of lost on this.

[Freelancier]

I don't know about KY, but I've got my own "foreign" LLC set up in another state. Basically, you just need an in-state "agent", someone to accept in-state inquiries, coul d be an attorney, could be a relative who lives in KY (personally, I wouldn't use the employee, who could quit on you). When you transfer the paperwork, you would go to the KY Sec State office (online if they offer this service), and let them know the new mailing address and new LLC members (while removing the old ones). I recommend -- if you can -- to hold off on the transfer until after the first of the year, so that you can renew the LLC and change the information all at the same time and only pay once.

After that, you're considered a business in KY and need to pay any local sales taxes for transactions that happen in-state that are covered under their tax laws. You'll ALSO have a presence in TN (since you're doing work from there as well), so any in-TN transactions may also have sales tax repercussions. Verify that info with a local accountant to make sure you comply with the laws correctly and register your business the proper way with the taxing and labor departments of both states.

[vintage_Car]

Yes we all agree the transfer will happen Jan. 1 or very close to it. What if I want the LLC to be in TN, not KY. I would rather it be in TN since that will be where I am located and will be working from...or is there a benefit to leaving it in KY?

[Freelancier]

Benefit is that it's likely cheaper to be a local LLC than a "foreign" one (depending on how much the costs are and how much you'd have to pay for a "foreign" agent in KY). Other benefit is that you'll only need to worry about TN taxes for the most part, because a remote employee working from home is not likely to be mistaken for a "presence" in that state.

As for how you'd move it, you could just register the LLC in TN and then transfer all assets to that LLC and shut down the other LLC (get a lawyer to help with that, to make sure that you have all the details worked out so that past liability doesn't move with the change of LLC). Downside could be if the name is already taken in TN.

[vintage_Car]

If I will be the only owner of the LLC does that complicate anything, benefit/hurt me taxwise?

[Freelancier]

As opposed to... what? Single-person LLCs are disregarded entities from the point of view of tax law. Once you get into more than one person, it gets slightly more complicated.

I'd recommend that before you sign an agreement to buy this company, to get a lawyer and an accountant lined up to look over things and to make sure you have the right choices for the business entity configuration that matches what you need. You likely won't need more than an hour or two of the accountant's time (top end $400), and you may not need more than that of the lawyer's time either.

[videogamesrock]

In order to transfer assets and keep the same tax id you must

1 create a new llc in TN. Same name if you want.
2 complete and articles of merger between the KY and TN LLC.
3 dissolve the KY LLC.

That is how you transfer assets, and states.

[videogamesrock]

Benefit is that it's likely cheaper to be a local LLC than a "foreign" one (depending on how much the costs are and how much you'd have to pay for a "foreign" agent in KY). Other benefit is that you'll only need to worry about TN taxes for the most part, because a remote employee working from home is not likely to be mistaken for a "presence" in that state.

As for how you'd move it, you could just register the LLC in TN and then transfer all assets to that LLC and shut down the other LLC (get a lawyer to help with that, to make sure that you have all the details worked out so that past liability doesn't move with the change of LLC). Downside could be if the name is already taken in TN.

The liability will move with llc no matter what. In regards to name change the merger documents will ask what the surviving entities name shall be.