Moving States As A Startup: What Happens To Your Company’s Taxes And Payroll?

2025-11-21

When a founder says “we are moving the company to another state,” they usually mean one of three things:

The founders are moving personally.
The “HQ” address is moving.
The legal entity is being re domiciled or a new one is formed.

Each version has different tax and payroll consequences. The good news is that your federal identity stays the same. The less fun news is that state tax, payroll, and registrations need a deliberate cleanup.

This guide walks through what changes, what does not, and gives you a practical checklist for moves that involve states like Florida, New York, Texas, and California.

What does not change when you move

Some parts of your stack are “federal” and do not reset when you change states.

These usually do not change:

Your employer identification number
Your federal income tax filing obligations
Your federal employment tax obligations for employees
Your cap table and stock records, if you keep the same legal entity

If you formed a Delaware C corporation with an employer identification number, that combination stays the same even if your team goes from New York to Texas or from California to Florida.

The Internal Revenue Service has general pages that show how business structures and employer identification numbers work:

Your federal payroll and employment taxes also follow the same framework, even if the state mix of employees changes. For details:

Afternoon plugs into that federal layer once and does not need a new employer identification number every time you move.

What can change when you move states

The moving pieces sit mostly at the state level.

When you relocate a startup, you may need to:

Register as doing business in the new state.
Set up new state payroll accounts, or close old ones.
Change which states you withhold income tax for on payroll.
Register or deregister for state and local sales tax.
Update addresses and “base of operations” for business licenses.

The exact impact depends on:

Where your entity is formed.
Where your employees actually live and work.
Where your customers are located.
Whether you are dissolving an old entity, filing a “foreign qualification,” or doing a legal conversion.

Afternoon’s state map is built around those questions. We track where you have employees, where your entity is registered, and where your sales are, then show which tax accounts you need.

Step 1: Clarify what “moving” means for your entity

Before you touch payroll or sales tax, pin down the legal move.

Common patterns:

Founders move from California to Florida but keep a Delaware C corporation. You may register the Delaware entity as doing business in Florida and wind down some California registrations.
A New York corporation converts into a Delaware corporation. You may have both New York and Delaware filings in the year of conversion.
A Texas based team opens a new office in New York while keeping the main office in Texas. Now you are dealing with two sets of state payroll and withholding rules.

You usually have three levers:

Formation state, such as Delaware or California.
Home state registration, such as qualifying to do business in New York, Texas, or Florida.
Local licenses, such as city business tax in places like New York City.

The United States Small Business Administration has a general guide on launching and choosing business structures:

Once you know whether your entity itself is changing or just the address and registrations, you can plan tax and payroll adjustments.

Step 2: Update state payroll and withholding

State payroll and withholding usually change faster than sales tax when you move people.

Two key ideas:

States care where the employee works and lives.
You may owe withholding and unemployment tax in different states for different employees.

The Internal Revenue Service explains the federal side of employment taxes. States add their own layers on top:

Then each state has its own employer portal.

Examples for the states in our angle:

Florida has no personal income tax, but the Florida Department of Revenue handles other business taxes and some employer accounts:
- Florida Department of Revenue: Account registration
- Florida Department of Revenue: New business start up kit
New York requires registration for withholding if you pay wages to New York residents or for services performed in New York:
- New York State Department of Taxation and Finance: Businesses
- New York State: Withholding tax requirements
Texas handles state unemployment and has no personal income tax, but you may still need state unemployment insurance and other employer accounts.
Your payroll provider and Texas workforce agencies guide that setup.
California uses the Employment Development Department for employer payroll tax accounts, including unemployment insurance and state disability insurance:
- California Employment Development Department: Payroll taxes
- California Employment Development Department: Employers

Practical sequence when you relocate employees:

Register for employer accounts in any new state where employees will actually work.
Update your payroll provider with each employee’s work state and home address.
Stop withholding in a state when you no longer have employees performing services there, after you have filed the final returns.

Afternoon’s payroll mapping helps you see which employees are tied to which state accounts and flags when you need to open or close one.

Step 3: Adjust state income, franchise, and business taxes

Your federal corporate income tax return follows the entity, not your zip code. State corporate and franchise taxes are more territorial.

Changes you may see after a move:

A shift in which states can tax your company’s income.
New franchise or minimum tax obligations in the new state.
Apportionment changes if you file in more than one state.

For example:

New York has corporate taxes, sales taxes, and withholding taxes, with resources for businesses on its tax site:
- New York State Department of Taxation and Finance: Businesses
Texas does not have a traditional corporate income tax, but it has a franchise tax administered by the state comptroller along with sales and use tax:
- Texas Comptroller: Sales and use tax
California has a corporate income tax and an annual minimum franchise tax for many corporations.
Florida has a corporate income tax and other business taxes managed through its Department of Revenue:
- Florida Department of Revenue: Business tax registration and forms

Your tax preparer will help with apportionment, which is how you split income across states. What matters for you operationally is:

Registering in states where you now have “nexus,” such as employees or an office.
Closing accounts in states where you no longer have a connection, once you file final returns.

Afternoon’s state map and monthly reviews keep track of which states you file in and what changed after a move.

Step 4: Recheck sales tax obligations after the move

Sales tax is often tied to where your customers are rather than where you live. A move can still change your risk profile.

Two main ways a move matters:

Physical presence: moving an office or warehouse can create sales tax obligations in the new state.
Economic nexus: your revenue by state may cross thresholds in new states as you grow.

For example:

New York requires many sellers of taxable goods and services to register as sales tax vendors before doing business:
- New York: Register as a sales tax vendor
Texas requires a sales and use tax permit if you are engaged in business in the state under certain conditions:
- Texas Comptroller: Sales and use tax permit FAQ
Florida requires many businesses to register with the Department of Revenue before they begin activities that are subject to Florida taxes:
- Florida Business Tax Application and instructions
California administers sales and use tax through the California Department of Tax and Fee Administration, separate from the Employment Development Department.

Even if you move from a high tax state to a state with no income tax, your sales tax footprint across states does not disappear. It still follows where your customers are and how much you sell into each state.

Afternoon’s sales tax engine is built around this. We read your revenue by state, apply state rules, and show where you need to register, regardless of where your founders live.

Step 5: Update addresses and registrations across systems

A state move will also ripple across your basic registrations and operations.

Places to update:

Secretary of state records for your entity and any foreign registrations.
State and local business licenses, such as city business tax accounts.
Payroll provider and benefits platforms.
Bank records and know your customer information.
Your accounting system’s legal entity and address fields.

States often have central portals for business registrations and updates. For example:

Florida publishes a “new business start up kit” and registration guidance:
- Florida Department of Revenue: New business start up kit
New York uses Business Express and the Department of Taxation and Finance sites for many registrations:
- Start a business in New York State
Texas and California have separate sites for business entity records, sales tax, and payroll accounts. Links above cover sales tax and employer payroll taxes.

Afternoon’s onboarding checklists and monthly reviews help you track which systems still show the old state and where something needs to be updated.

Practical move checklist for founders

Here is a simple sequence you can adapt.

Before the move

Confirm whether the legal entity is changing or just the main address.
List all states where you currently have employees, offices, or registrations.
Ask your tax advisor which state returns you file today.
Decide on your new “home” state and where employees will physically work.

As you move

Register your entity to do business in the new state, if required.
Open new state payroll and withholding accounts where employees will work.
Update employee addresses and work locations in your payroll system.
Register for sales tax in the new state if needed, or confirm that you already have coverage.

After the move

File final payroll and sales tax returns in states you are leaving, and close accounts where appropriate.
Update your accounting system with the new address and any new tax accounts.
Refresh your state exposure map for income, franchise, and sales taxes.
Make sure your month end close process captures the change so your profit and loss statement and filings stay aligned.

Most of this is admin work, not strategy. The risk comes from forgetting a small registration and getting a surprise notice later.

Afternoon’s role is to keep your state picture current, tie each registration back to real revenue and payroll data, and surface the changes you need to make when you move.