According to Allied Van Lines, Spring is typically the best season to move to another residence. It’s probably a good time, too, to relocate your business if that’s what you want or need to do. And many businesses are relocating. Due to remote work arrangements, they may no longer need their current space. Or perhaps they’re seeking a better business environment than the one in which they’ve been operating. Here are some factors to consider when relocating, whether it’s across town or across the country.
Factors to consider when relocating your business
Staffing
Be sure to consider what a move will mean to your current and future staff.
- Will the move be favorable to your current staff?
- Will you lose employees when you move?
- Will you be able to recruit new, and perhaps better, talent in your new location?
Consider what a move means in terms of employees’ commuting time. Also think about whether they’ll need to buy or rent a new home in your new location and if the cost of housing higher or lower in your new location.
Note: You may want to help employees by paying toward moving costs. These payments are additional compensation to employees, subject to employment taxes.
Customers
Depending on the nature and location of your business, customers may or may not be impacted by any relocation. For example, if you deal with customers online, your physical move has no impact on them. But if you move across town or to another state, you may lose some or all of your customers. Of course, a new location may be even better for attracting customers.
Taxes
For businesses, state income tax rates and rules are more favorable in some states than others. For example, owners of pass-through entities have no income tax on their share of business income is no-tax states (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming). State corporate income tax rates vary by state, with only South Dakota and Wyoming levying neither a corporate income tax or gross receipts tax. The Balance has a list of the best and worst states for business taxes in 2023.
Note: When you relocate, be sure to give the IRS a change of address by filing Form 8822-B, Change of Address or Responsible Party—Business. Merely entering a new address on the next tax return you file isn’t sufficient.
Rent and utilities
The cost of rent and utilities in your new location may be higher or lower than in your old location. Regardless, you’ll likely need to double up on payments so you overlap the move from your old location to the new one. How much of an overlap depends on when you can move into your new location. You may expect it to be June 1st, but the landlord’s buildouts for your business may take longer than expected, delaying a move.
Regulatory climate
The regulatory cost of doing business can be staggering and you may not even realize it. A study from the U.S. Chamber of Commerce several years ago found that federal regulations alone cost businesses $1.9 trillion in direct costs, lost productivity and higher prices. The costs to businesses with 50 or fewer employees are nearly 20% higher than the average for all firms.
For some businesses, one of the main reasons to relocate is the regulatory climate. Some locations make it difficult to operate because of red tape, while others are more conducive to doing business. The climate in the current location may be unfriendly to business while a new location may be business-friendly. Check regulations on such matters as:
- Starting a business
- Dealing with construction permits
- Enforcing contracts and agreements
- Licensing
- Rules for home-based businesses
Cost to relocate
It can be costly to relocate. You likely need to get new business cards, stationery, and brochures with your new address if you use these paper products. If you have a storefront, a new location means new signage.
The cost of the move itself can be especially steep if your business has certain equipment and supplies that requires special handling. One business I know had to keep their supplies at a certain temperature, so they needed a mover that could make this happen.
Chron tells you how to calculate business relocation costs.
Quality of life
Weather, crime rates, political climate, homelessness on the streets, access to transportation, and other factors all contribute to quality of life. A new location can mean a better quality of life.
Final thought
Relocating a business takes a lot of thought and planning. Large corporations often take two to three years to decide and then initiate a move. Small businesses can do it faster, but you still need to develop a business relocation plan. When, where, and how to make the move must all be carefully considered. Then budget accordingly.
