If you own a business that was created in a state other than Ohio, you will need to qualify or register that business in Ohio if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-Ohio) limited liability company (LLC) to do business in Ohio.
For Ohio purposes, if your LLC is formed in another state, then it is known as a foreign LLC in Ohio. In other words, foreign doesn’t mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Arizona is a foreign LLC in Colorado.
According to Ohio’s LLC Act, you are required to register your foreign company with the state of Ohio if you “transact business” in Ohio. What does this mean? Well, like most states, Ohio’s LLC Act does not specifically define the phrase “transact business” in relation to foreign registrations.
However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state’s residents. Generally speaking, physical presence and nexus are synonymous, and mean having:
Certain exceptions may apply and the rules can get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo’s articles on Internet Sales Tax: A 50-State Guide to State Laws.
Most state LLC Acts provide a list of exempt activities (in other words, activities that do not constitute transacting business in the state). These lists can be helpful: Foreign LLCs engaged only in those activities should feel reasonably confident in not registering or qualifying in the state. However, unlike other states, Ohio’s LLC Act does not provide a list of exempt activities.
To register your business in Ohio, you must file a Registration of a Foreign Limited Liability Company with the Ohio Secretary of State (SOS). You can download a copy of the application form from the SOS website.
To complete the form, you must provide more or less the same information that you need to create an LLC in your home state. More specifically, for an Ohio registration, you need to provide:
The downloadable registration form includes a required cover sheet where you can provide information about how you want the SOS to handle the filing. The basic filing fee is $125.
If your LLC transacts business in Ohio without having registered, it cannot bring a lawsuit in any Ohio courts. However, not being registered does not invalidate your LLC’s contracts or prevent your LLC from defending a lawsuit in the Ohio. Also, members of your LLC are not personally liable for the obligations of the company solely because the company transacts business in Ohio without being registered.
If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in Ohio are similar. You will, however, have to use a different application form, Form 530A, Foreign For-Profit Corporation Application for License. See the Ohio Secretary of State website for forms, information, and filing instructions for registering a foreign corporation in Ohio.