Why More Companies Are Moving to Florida and Texas—And What Business Owners Should Know

In recent years, a quiet but powerful trend has emerged in small and medium-sized businesses: an exodus of companies from high-tax, high-regulation jurisdictions like California, New York, Michigan, and Illinois, and into more business-friendly environments—chief among them, Florida and Texas. For owners of limited liability companies (LLCs), corporations, and partnerships seeking a fresh start, the favorable tax climates and pro-entrepreneurial legal frameworks of the Sunshine and Lone Star states make them prime destinations.

While transferring a business to a new state might sound as simple as filing a form or updating an address, the legal process—variously known as redomestication, redomiciling, transfer, or conversion—is far more nuanced and often misunderstood because of the conflicting, and frequently misleading, information available online and on social media.

What Is Redomestication?

Redomestication refers to the legal process of transferring a business entity's state of incorporation or formation from one state to another, such as moving a Delaware corporation, New York limited liability company, or California partnership to another state, thereby making that new state the entity's home jurisdiction. Crucially, it allows the company to retain its federal Employer Identification Number (EIN), bank accounts, contractual obligations, business credit history, and—most importantly—its legal identity.

In short, a redomesticated company is the same company in the eyes of the law, just governed under the laws of a new state. This process differs substantially from foreign qualification, where a business simply registers to do business in a second state without leaving the original one, and from mergers, which require combining legal entities and often trigger taxable transactions or new EINs.

Why Florida and Texas?

Florida and Texas both offer an unusually business-friendly legal and regulatory environment. These jurisdictions impose no personal income tax, no franchise or income tax on most business entities, and minimal regulatory overhead. When coupled with strong asset protection statutes and a robust, technology-forward state government, the legal infrastructure is designed to encourage business migration.

These benefits are not merely theoretical. Cummings & Cummings Law, a law firm led by a dually-licensed attorney and CPA, reports a significant uptick in inquiries from business owners based in California, New York, and Delaware, many of whom cite burdensome state tax laws and administrative inefficiencies as their reason for leaving: "We see companies of all sizes and structures—LLCs, corporations, subchapter S entities, and others—seeking to transfer their businesses," says Chad D. Cummings, Esq., CPA, the firm's principal attorney. "They're not just chasing tax savings; they're looking for a jurisdiction that respects entrepreneurs."

Advantages of Redomestication Over Other Methods

Redomestication carries several structural and legal advantages over foreign registration or mergers. While every situation is different, these generally include:

1. Preserving EIN and Business Credit: Because the legal entity remains continuous, there's no need to apply for a new EIN or rebuild business credit—an invaluable asset for companies with longstanding vendor or banking relationships.
2. Retaining Legal Identity: The redomiciled business keeps its legal identity intact, maintaining continuity of contracts, licenses, and litigation history.
3. Avoiding Multi-State Compliance: Unlike foreign registration, redomestication allows a business to dissolve its nexus to the former state, eliminating the need to file duplicative annual reports or pay ongoing franchise taxes in the former state of domicile.
4. Bypassing Taxable Mergers: Unlike a merger, which may involve asset transfers and complex tax consequences, redomestication is a non-taxable transaction under the Internal Revenue Code when properly executed.
5. Operational Continuity: Redomestication avoids the operational disruption that typically comes with forming a new entity or merging existing ones, including the need to notify clients, amend contracts, or restructure internal ownership documents.

Why Legal Counsel Matters

Because of the state and federal legal and tax implications, redomestication is not a "do-it-yourself" project. Unlike forming a new LLC, the redomestication process involves drafting and filing multiple legal instruments: a Plan of Conversion, Articles of Conversion, Articles of Formation, and a Unanimous Written Consent of the owners. Mistakes—particularly those involving timing or filing sequence—can result in IRS scrutiny, state-level penalties, or even inadvertent dissolution of the company when moving a business to Florida or transferring a company to Texas.

Furthermore, failure to properly redomesticate may result in the business being penalized by the Secretary of State for operating without approval and against state law.

Cummings & Cummings Law warns against relying on non-attorney online platforms for such high-stakes transitions. "We routinely assist clients who tried to handle the redomestication process on their own or through a non-lawyer service, only to find themselves in a quagmire of rejected filings, duplicate entities, or worse—accidental dissolution," says Cummings. He continues: "These 'clean-up' jobs, regrettably, take far longer and cost far more to resolve than if we had been retained at the outset."

Final Thoughts

As companies continue to flee high-cost states in search of better tax policy, regulatory efficiency, and legal certainty, Florida and Texas have emerged as beacons for small and mid-sized businesses. But migrating a business requires more than good intentions; it requires competent legal and tax guidance to ensure compliance, continuity, and protection.

Whether you operate a closely held LLC or a multistate corporation, the process of redomesticating your business should not be left to guesswork. For business owners eyeing Florida or Texas as their next base of operations, redomestication may be the smartest—and least expensive—way to make the move.