How to Qualify as a Foreign Business in Illinois

If you do business within Illinois, then you're conducting "intrastate business." For example, if you open a small salon in Chicago or provide printing services to college students in Champaign, then you're running your business within the state of Illinois.

If you formed your corporation or limited liability company (LLC) in Illinois, then you're already authorized to do business in the state. But if you formed your business in another state, Illinois requires you, in most circumstances, to apply for authority to do business within the state.

Illinois's foreign qualification process can be complicated and confusing. There's no consistent standard around when foreign businesses must apply for authority with the state government. Additionally, the application can be difficult to complete and the application fee requires estimated calculations. For help with this complex process, you might find it useful to talk to an Illinois business lawyer. An experienced attorney can help you decide whether you need to file for authority in the first place and they can help you fill out the application when you're ready.

(For additional non-state-specific information, read about qualifying to do business outside your state.)

When You Have to Qualify to Do Business in Illinois

Illinois law requires any company formed outside of Illinois (called a "foreign business") that transacts intrastate business in Illinois to file for authority to do business in the state. "Intrastate business" refers to transactions and operations that take place within the state—as opposed to transactions and operations that are conducted between states (called "interstate business").

For example, suppose you formed your company in Indiana but have since opened a second store in Illinois. Your Illinois store does business with Illinois customers from its Illinois location. In that case, you'd need to file for admission to do business in Illinois.

The two most common types of foreign businesses are:

• foreign corporations, and
• foreign LLCs.

Illinois's Business Corporation Act of 1983 and LLC Act don't define what constitutes "doing business" in relation to foreign entities. However, you can look to some court cases to get a good idea about which activities are considered "doing business" in Illinois.

For example, some courts have said that a corporation qualifies as "doing business" in Illinois if its business activity in the state is fairly permanent and continuous—not just occasional or casual. (Hendry v. Ornda Health Corp., Inc., 318 Ill.App.3d at 853 (2000).)

For more insight into which business activities require registration, you can look at which activities don't qualify as intrastate business (discussed below).

When You Don't Have to Qualify to Do Business in Illinois

Under Illinois's Business Corporation Act of 1983 and LLC Act, some activities don't constitute doing business in the state. If your corporation or LLC only does the following activities, you don't need to qualify to do business in Illinois:

• settling, defending, or maintaining any proceeding
• holding directors' or shareholders' meetings or member or manager meetings or conducting internal company affairs
• maintaining a bank account
• having offices or agencies to register, transfer, and exchange company securities and having trustees for those securities
• selling through independent contractors
• soliciting or obtaining orders when the orders require acceptance outside the state before they become contracts
• owning, without more, real or personal property (for example, renting out a house wouldn't count because you're doing something with the property and not just owning it)
• carrying on a single, isolated transaction that's completed within 120 days and isn't one in the course of repeated comparable transactions, and
• having a corporate officer or director or an LLC member or manager who's an Illinois resident.

(805 Ill. Comp. Stat. 5/13.75 (2023); 805 Ill. Comp. Stat. 180/45-47 (2023).)

Additionally, any activities that are considered part of foreign or interstate commerce wouldn't qualify as doing business in Illinois. Companies participating in foreign or interstate business wouldn't have to register with the state as a foreign entity.

Filing an Application for Authority to Do Business in Illinois

The Secretary of State (SOS) has two different forms for LLCs and corporations. These forms and the registration requirements are fairly different between the two foreign business structures. However, as of 2023, the filing fees for the forms are the same. The minimum fee for the LLC and corporation forms is $150. The filing fee must also include any fees owed for licensing, franchise tax, penalties, and interest.

Additionally, you must submit the applications in duplicate.

Foreign Corporation Application for Authority

A foreign corporation must provide the SOS with a range of information. In addition to sending the SOS a recent certified copy of its articles of incorporation, a foreign corporation must file an application (and a copy of the application) that provides the following:

• the name of the corporation, including any necessary additions to its name to comply with Illinois law for corporation names
• when and where the corporation was formed and the period of duration
• the street address of its principal office
• the name and street address of the corporation's registered agent
• the purpose the corporation was formed
• the names and street addresses of its directors and officers
• the number of shares the corporation can issue itemized by classes and series, if any
• a statement of the amount of paid-in capital of the corporation (the amount of money or other property paid to the corporation in exchange for issuing shares)
• estimates of the total value of all property to be owned by the corporation for the following year both anywhere and within Illinois, and
• estimates of the amount of business that'll be transacted both anywhere and within Illinois for the following year.

(805 Ill. Comp. Stat. 5/13.15 (2023).)

You can download Form BCA 13.15 Application for Authority to Transact Business in Illinois from the domestic and foreign corporations publications/forms section of the SOS website. You can mail the form to the SOS's Department of Business Services.

Providing the necessary information in the application and calculating the appropriate fee can be challenging. The SOS provides A Guide for Qualifying Foreign Corporations that can help you better understand the application process. The guide also has information about when you should register as a foreign corporation and the associated penalties for failing to register.

Foreign LLC Application for Authority

A foreign LLC that wants to transact business in Illinois must first be admitted. A foreign LLC must submit an application for admission to the SOS to transact business that includes the following information:

• the LLC's name and, if different, the name it proposes to use to transact business in Illinois
• the state where the LLC was formed, the date of its formation, and period of duration
• the name and business address of the proposed Illinois registered agent
• the street address of the LLC's principal place of business
• the purpose the LLC was organized and the purpose for conducting business in Illinois
• a statement about whether the LLC is manager-managed or member-managed, and
• a statement that the SOS is appointed the registered agent if the LLC doesn't have a valid agent in place.

(805 Ill. Comp. Stat. 180/45-5 (2023).)

You must also submit with your application an authenticated certificate of good standing or similar document that's dated within the last 60 days.

You can download Form LLC 45.5 Application for Admission to Transact Business from the LLC publications/forms section of the SOS website. You can mail the form to the SOS's Department of Business Services Limited Liability Division.

Consequences of Not Registering Your Business in Illinois

If a foreign LLC or corporation transacts business in Illinois without the authority to do so, it can't file or maintain a civil lawsuit in the state. However—regardless of its authority to transact foreign business—the company can still defend itself against any actions or lawsuits in Illinois. Moreover, the failure of a foreign LLC or corporation to get the authority to do business in Illinois doesn't affect the validity of any company contract or act.

Penalties for foreign corporations. An unauthorized foreign corporation is responsible for paying all fees, franchise taxes, penalties, and other charges it would've had to pay to the current date if it'd properly and timely registered. For example, if a corporation should've registered in 2021 but it's now 2023, then that corporation is responsible for all the fees, franchise taxes, penalties, and interest from 2021, 2022, and now 2023.

Additionally, if a foreign corporation doesn't file an application for authority within 60 days of when it started doing business in the state, then it's liable for the greater of either:

• 10% of the filing fee, license fee, and franchise taxes, or
• $200 plus $5 for each month or fraction of a month that it transacted business without authority.

Penalties for foreign LLCs. An unauthorized foreign LLC is responsible for paying all fees, franchise taxes, penalties, and other charges it would've had to pay to the current date if it'd properly and timely registered. Additionally, if a foreign LLC doesn't file an application for authority within 60 days of when it started doing business in the state, then it must pay a penalty of $2,000 plus $100 for each month or fraction of a month it continued to do business without authorization.

(805 Ill. Comp. Stat. 5/13.70 (2023); 805 Ill. Comp. Stat. 180/45-45 (2023).)

Additional Information About Registering Your Foreign Business

Just like domestic corporations and LLCs, your foreign business will be responsible for maintaining its authority to transact business in Illinois. Every year you'll need to file an annual report and pay the franchise tax. For more about maintaining your LLC, check out our article on LLC annual report and tax filing requirements in Illinois.

You might also be responsible for other business taxes and filings, such as sales tax and employment tax. You can learn more on the Illinois Department of Revenue website.