Legal Question in Business Law in California

Re: moving a ca. corp to texas

If you want reliable responses to this question, you will need to consult with an attorney so they can find out about your business, tax structure, etc. TX doesn't have state tax but it does have other types of taxes and high property taxes.

Re: moving a ca. corp to texas

In a completely technical sense, one cannot "move" a corporation from state to state. A corporation is an artificial "person" existing by virtue of the state law of the state of its incorporation.

If you want to relocate a business currently operated by a California corporation to Texas, there are two (at least) fundamentally different ways to go about it.

The first is to qualify the California corporation to do business in Texas. It continues to be a California corporation, but in addition it will then have authority (and responsibilities) under Texas law, and can operate there. As a California lawyer, I can't give you any particulars as to how to register a California corporation in Texas, but in general it's easy and is done through the new state's Secretary of State.

The other way is a little more complex but may produce a better long-term result. That method is to form a new Texas corporation, then merge the California corporation into it. After that is done, the California corporation is reported to the California Secretary of State as being merged out of business. The California side of the applicable law is found at California Corporations Code sections 1100 to 1113. Note in particular section 1107 covering the effect of merger. Texas probably has similar provisions covering its rules for mergers, and your merger would have to observe the provisions of law of both states, but probably with primary emphasis on the Texas law since the surviving corporation would be a Texas corporation.

Generally, a merger of the kind described has no effect on the federal income tax liability of the business. As to on-going tax burden differences between California and Texas, I'm sure they are many, but that would require a detailed study including a lot of specific information about the business.

Re: moving a ca. corp to texas

I concur with Mr. Whipple's advice on the issue. With that in mind, I would not suggest simply qualifying in TX but would suggest a new TX corporation be formed and the CA corporation merged into the new corporation. The merger has numerous legal and business advantages.