Operating in Another State? You’ll Need to File a Foreign Qualification to Stay Compliant
If your company is conducting business in a state other than the state of formation, you may need to file a foreign qualification. With our services, we make this process quick and easy!
Foreign Qualification Package Starting at $239 Per State*
*This price does not include state fees or add-ons, which vary from state to state.
What Is Foreign Qualification?
Foreign qualification refers to when a Limited Liability Company (LLC), C Corporation, or other business entity formed in one state registers with the Secretary of State office in another state for the authority to conduct business there.
For example, if an LLC registered in California wants to operate in Nevada, it must file for foreign qualification in Nevada. California remains the LLC’s home state (where the entity is considered a domestic LLC), but the company will also have the legal authority to conduct business in Nevada as a foreign LLC after it’s foreign-qualified there.
Business entities that want to operate in multiple states beyond their home state, must foreign qualify in each of those states.
Benefits of Foreign Qualification
Allows an existing entity to register in states beyond its home state without filing formation paperwork in each.
Enables a company to conduct business in multiple states.
Permits a company to open a bank account in a state where it’s doing business.
How Do You Know if You Need to Foreign Qualify Your Business?
If your LLC, C Corporation, or other registered business entity is conducting business in a state other than your entity’s state of formation, the state where the business transactions are taking place may require you to qualify your business within the state where the business is being conducted by filing a Certificate of Authority (also referred to as a Statement & Designation by a Foreign Corporation) with that particular Secretary of State’s office.
So, what’s considered conducting business or having operations in a state? While states’ definitions and rules vary, the general criteria for needing to foreign qualify are:
- Having a physical presence (e.g., office, store, warehouse) in the state
- Having employees in the state
- Having economic nexus (i.e., reaching a certain income or sales threshold in the state)
When a state approves a company’s request for foreign qualification, the entity must fulfill the state’s ongoing compliance requirements, which could include:
- Filing an annual report
- Reporting and paying state and local income tax
- Reporting and remitting state and local sales tax
- Reporting and paying state and local payroll taxes
- Maintaining a registered agent in the state
If a business entity is required to foreign qualify in a state but fails to do so or neglects to comply with the state’s laws governing foreign entities, the company could face fines, penalties, or even legal action.
Apply for a Foreign Qualification
CorpNet can help your LLC or Corporation with all aspects of foreign qualification, saving you both time and money with our fast, reliable, and affordable service.
- Obtaining a Certificate of Good Standing from your home state
- Preparing and filing a Certificate of Authority in the states where you wish to expand your operations
- Serving as your Registered Agent in your state of formation and those where you have foreign qualification
- Registering for payroll tax in states where you have employees
- Applying for a sales tax permit in states where you’re selling taxable goods and services
Business filing processing times may vary depending on the state and other factors. Standard processing is from two to four weeks, and expedited processing generally takes one to two weeks (additional fees apply).
*Service fees shown above do not include shipping and handling. Additional state fees may apply and will be quoted upon order confirmation. Prices are subject to change without notice.
