Legal Question in Business Law in California

Re: Transferance of LLC from one state to another

Why did you form the LLC in Delaware in the first place? If those reasons are still valid, leave it there and pay the California tax.

If you didn't have a good reason to choose Delaware (and there are advantages, but mainly for large corporations or maybe smaller companies with special needs), you may want to convert the Delaware LLC to a California LLC, and California law has a provision for this at Corporations Code section 17540.8 -- however, 17540.8(a) says this can be done ONLY if the law of the state where the LLC is organized permits such conversions.

As a California, not a Delaware, attorney, I can't give you a definitive answer on this, but my guess is that Delaware law does NOT authorize the conversion -- see, for example, Del.Corp.Law 6 18-216.

Your alternatives then will depend upon whether the Delaware LLC has actually done any business. If so, you can have it sell its assets to a new California LLC and close the Delaware LLC after paying its bills, including taxes. Or, you can keep the Delaware LLC and register it in California as a foreign LLC. This may be simplest if this is a small business, but you have to understand you will have reporting and tax obligations to two states. Another possibility is to merge the Delaware LLC into a new California LLC. California law allows this (see Corp. Code section 17550) provided Delaware law does not prohibit this (note that 'not prohibit' is less restrictive that 'allows' since silence on the issue satisfies the first term, but not the second).

If the Delaware LLC has not done any business, you could just abandon it and start afresh in California. This is an approach lawyers don't recommend because business entities are supposed to wind up their affairs, file certificates of dissolution, search out creditors, file final tax returns, etc. but it happens all the time.

Re: Transferance of LLC from one state to another

Your question shows the folly of doing these things without competent legal counsel. The answer is "it depends." If you are starting a business you should sit down and discuss your plans with a business lawyer.