Foreign Limited Liability Company

If your limited liability company (LLC) is doing business in another state besides the one where you formed your company, you are probably going to need to set up a foreign LLC.

What is a Foreign LLC?

Contrary to the way it sounds, a foreign LLC refers to U.S. companies. It is a classification used for companies that do business in states other than the home state where the LLC was formed. States require companies to register as foreign LLCs to ensure they meet regulatory and tax requirements, and the term "foreign" simply means the company was set up in a different state.

When Should You Register as a Foreign LLC?

If you registered your LLC in one state, and you are operating your business in other states as well, you need to register as a foreign LLC in each of those states where you are conducting business.

Each state has its own rules as to what types of business activities qualify you as a foreign business. You can usually find those rules on the website of the secretary of state's office. Typically, you'll be required to register as a foreign LLC if any of the following is true:

• You have a physical presence such as offices, warehouses, or retail stores in the state.
• You employ workers in the state.
• You hold regular, in-person meetings with managers, investors, or clients in the state.
• You have a business license from the state.

Other activities that might require you to register as a foreign LLC include having a bank account or property like a fleet of delivery vans in the state.

Just doing a lot of business in another state doesn't necessarily mean you have to register there. If you have an online business in New York selling surfboards, for example, and the bulk of your sales come from California, you probably won't be required to register your business in California because interstate commerce alone isn't a criterion. But if you open a warehouse in California to speed shipments to your customers, you probably will have to register as a foreign LLC there.

An alternative to foreign registration is to form a new LLC in each state where you want to operate. You would need to follow the procedures required by the state, but the advantage is that if you are sued or you declare bankruptcy at an operation in one state, your other operations would not be responsible for any debts or liabilities.

How to Register as a Foreign LLC

In most states the office of the secretary of state handles applications for foreign registrations, and you should check that state's requirements. Nolo also offers detailed information on filing a foreign LLC for each state.

The application might be called different names depending on the state including:

• application for registration of foreign LLC
• foreign LLC Registration
• application for certificate of authority
• application for registration
• certificate of registration of Foreign LLC
• foreign registration statement
• statement of foreign qualification to conduct activities
• certificate of authority, or
• statement and designation by a foreign corporation.

The steps and application are similar to those you followed to form your LLC including:

Conduct a name search. Before filing your application you should determine whether another business in the state is already using your company name. If your company name is already in use, you'll need to file a Doing Business As (DBA) name, sometimes called a fictitious business name.

Appoint a registered agent. You will need a registered agent with an address in the new state who can accept any legal notices. The registered agent can be someone you pay for this service or, if you have a physical location in the new state, it can also be an employee based at that location. Keep in mind though that a registered agent must be available to accept deliveries during normal business hours. If you are sent a legal document you can still be held responsible for knowing about its contents even if your registered agent was out of the office or on vacation at the time of delivery.

File an application. You should file your completed application and pay a registration fee to the office of the secretary of state or whichever agency handles these filings in your state. Fees vary by state from $50 in Michigan to $750 in Texas.

Some states require you to also include a certificate of good standing from the state where your LLC was formed to show you are legally authorized to operate in your home state. The document is available from the same state office where you filed your LLC registration. You'll need to be up to date on any required paperwork, fees, and taxes and, usually, pay a small fee, in order to get a certificate.

Select your state from the list below to learn how to register a foreign LLC in your state.

What Happens If You Don't Register?

Many states charge penalties that can be hefty if you are operating there without proper registration. You also would not be allowed to bring a lawsuit in that state.