Foreign qualification: registering your LLC to do business in another state

What is foreign LLC registration?

In company law, "foreign" means formed in another state, not another country. An LLC is a domestic LLC in its home state and a foreign LLC everywhere else. Before it does business in another state, that state generally requires it to register, a process also called foreign qualification or obtaining a certificate of authority. The LLC stays the same legal entity with the same EIN.

When is it required?

When the LLC is transacting business in the state, as that state's law defines it. Common triggers are an office, shop or warehouse there, employees working there, and regularly providing services in person there.

State laws also list activities that do not count on their own. Typical examples are holding a bank account, holding internal meetings, selling through independent contractors, an isolated transaction, collecting debts, and selling to customers in the state from outside it. Each state has its own list.

Tax is a separate question. A state can require you to collect its sales tax or pay its income tax even where company law does not require registration. See physical vs economic nexus.

How do you register?

1. Check the name

   Confirm your LLC's name is available in the new state.

2. Appoint a registered agent

   With a physical address in the new state.

3. Get a certificate of good standing

   From your home state, recently dated. See certificate of good standing.

4. File the application

   With the new state's business filing office, and pay the fee.

5. Register for state taxes

   Income, sales and payroll taxes, as your activity requires.

If your name is already taken in the new state, most states let the LLC register under an alternate name for use there. See LLC name rules and what a registered agent is.

What does it cost?

The registration fee is often the smaller cost. The yearly obligations in the new state usually matter more. See how much an LLC costs.

What happens if you do not register?

• The state can charge penalties and the fees and taxes you should have paid.
• The LLC generally cannot bring a lawsuit in that state's courts until it registers.
• Banks, landlords and licensing bodies may ask for proof of registration.

Contracts the LLC made are generally still valid, and failing to register does not by itself make the members personally liable. But the cost of catching up grows each year.

What changes after you register?

You keep two sets of obligations: annual reports or taxes and a registered agent in each state, and the new state's taxes on the business you do there. Keep the LLC in good standing in its home state too, because the second state's registration depends on it.

How do you withdraw when you stop?

File a withdrawal or cancellation of the registration with the state, after settling its taxes. To close the LLC altogether, see how to dissolve an LLC. Until you do, annual reports, fees and taxes keep falling due, even with no activity. In California that means $800 a year. See California LLC yearly filings.

Should you move the LLC instead?

If the whole business has moved, registering as a foreign LLC leaves you paying two states for good. Many states allow an LLC to convert or domesticate into the new state instead. See how to move your LLC to another state. See home state or another state.

This guide is general information. It is not tax or legal advice for your situation.