Posted by: Robin Gronsky | November 12, 2010

Want to Do Business in Other States? Why You May Need to Know What a Foreign Corporation (or LLC) Is

The internet has opened the world to any business who has a website.  Although many small businesses don’t have the expertise or need to become a global operation, many of you would be happy to become a national business.  What do you need to know when you are doing business outside of your home state?

The first thing you need to know is what each state in which you want to do business defines as “doing business.”  If the other state defines your business activities as “doing business,” you need to apply for a Certificate of Authority to Do Business as a Foreign Corporation or Limited Liability Company or Partnership.  Getting the Certificate of Authority requires a simple filing, getting a registered agent in that state, and the payment of a filing fee that may be anywhere from $75 to $700 dollars.  When you are filing for a Certificate of Authority, your company is a “domestic” corporation (or LLC or partnership) in your home state and a “foreign” corporation (or LLC or partnership) in every other state.

The application for a Certificate of Authority asks for basic information about your company – legal name (not your “doing business as” name), who the owners, officers, or members are, who the registered agent is, and where the home office is located.

A registered agent is a person or company who is physically located in the state in which you want to do business.  The person or company is designated to receive service of process when you are being sued by someone in that state.  The registered agent also received notices from government agencies about required filings you must make or taxes that you must pay.  It is the job of the registered agent to forward these notices and legal papers to you on a timely basis.  There are companies that exist just for this purpose.

Foreign companies may need to pay annual fees, pay sales and income taxes to each state in which they conduct business, and file certain reports each year.  Once you are soliciting business across state lines you need to keep up with the laws and regulations of each state in which you are doing business.

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