Here is what you need to know about moving your business to another state.
When moving a business to another state, business leaders must consider issues beyond choosing a moving company.
The most obvious concerns stem from the legal issues surrounding your current state’s laws and how different the laws are in your new location.
However, there are other considerations that drive business leaders to decide on relocation, such as:
- Costs of operations and living
- Access to the talent pool in another location
- Competitive advantages of moving to another market
Before you start to pack any boxes, obviously, it’s wise to consult legal counsel.
Attorneys can help your business follow all applicable state and local laws in the new location – as well as other legal concerns that may impact your business in the short- or long-term.
That said, let’s take a closer look at HR-related matters that may influence your decision to move (or not).
1. What are the financial factors to consider when moving a business?
The further away your company moves, the higher the cost of moving. The same logic applies to the relative size of your company.
Remember: Relocating 2,000 employees across the country will be much more costly than moving a 20-person office across state lines.
But understanding the costs of a business relocation goes beyond the mover’s initial estimate for hauling desks and office equipment. Consider these operating costs in the new state to help calculate the impact of relocating business to another state:
- Property lease or mortgage payments
- Cost for utilities and supplies needed for your business
- Changes in shipping costs from your new location
- Tax rates for the city, county and state
- Costs from complying with different regulations
- Cost of applicable licenses to operate in the new state
- Availability of tax incentives from a new municipality
- The wage scale to hire local talent
2. How might taxes, payroll and your company’s relocation impact your business?
It’s essential to assess your new location’s tax situation before moving your business to another state. A tax expert can be useful as you explore this aspect of a potential move. Depending on where you’re moving, a new location’s taxes may have a considerable impact on your organization’s profitability.
For instance, if you’re moving to a high-cost city like New York City or San Francisco, there may be multiple types of taxes (city, state, municipal) to pay. Or, if you’re moving away from a high-cost city, the inverse tax implications may be true.
Meanwhile, some businesses may be eligible for tax credits and other incentives in different locations.
Finally, if you are using a local payroll company that doesn’t do business in your new location, you may have to start over with a new payroll services provider. If you use a professional employer organization or PEO, they can adjust your payroll for your new location. In this case, it might be time to consider how a PEO can help you with employer responsibilities.
3. How will you navigate HR regulatory compliance in a new location?
Initially, some businesses may be motivated to relocate solely because another state has less stringent business regulations and lower taxes.
Yet HR-related laws and regulations are increasingly complex. When weighing where to move, it’s worth considering, for example, the workers’ compensation insurance requirement or the required timeline for filing for unemployment claims as these may impact your administrative timelines.
4. How will you handle the people part of the moving equation?
Your employees present one of the most significant pieces of the relocation decision. Understandably, the prospect of having their employer move to a new location can bring up a lot of concerns and questions.
These may include:
- Will you offer them a role in the new location?
- What if they decide not to move?
- Do you have the resources to hire and train large numbers of new staff?
- Will you be able to find the required skill sets in the new state?
- Will you be able to pay wages to attract talent?
- Will you pay relocation costs for those who make the move?
- Will you adjust wages to the local wage scale in the new location?
- Will you offer a remote work option?
- Does your company’s employee handbook have a relocation policy? A remote work policy?
Those are the main business concerns, but don’t forget to consider things like cost of living, access to schools and cultural amenities. After all, if you plan to relocate some or all of your employees, they and their families will take a hard look at these factors, too. And don’t forget the local labor market, which may impact whether partners or spouses are willing to make the move, too.
Finally, if you are able to adjust pay for local conditions, consider choosing to pay more. Paying less is tricky and can lower morale, as few people willingly take on the sacrifice of a relocation for less pay.
5. How will you assess the competitive advantages of moving to a new market?
When moving your business to another state, it’s crucial to think about how the new location will impact your short- and long-term operations.
- If your business is growing aggressively and you know you’ll need to increase your staff, make sure your new location has the labor pool to support that growth.
- If you need to hire people with specialized skills, conduct a study to see if the local labor pool has the particular talent you require for growth.
Also, assess the new locale for other specialized needs for your business, such as:
- Available facility sizes and locations to house your company and provide room to grow (e.g., office space, warehouses)
- Whether sufficient transportation and supplier resources are in place to help support growth
- Employee housing options and other amenities
Summing it all up
It’s critical to consider all the factors involved with relocating a business and then make the best decision that optimizes outcomes for all of your company’s stakeholders.
That’s why, when evaluating moving a business, it’s wise to consult with individuals who are knowledgeable in areas like law, taxes and HR. They can help you sidestep unforeseen challenges, obstacles and opportunities.
In particular, a seasoned HR professional may help you identify and define necessary policies and procedures to mitigate risks related to regulatory compliance in your new location. Learn more about HR regulatory compliance by downloading our free e-book: HR compliance: Are you putting your business at risk.