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Expanding Your Business to Another State
While Foreign Qualification may sound like you’re starting a business in Italy, what it really means is that you have some hoops to jump through in order to expand your existing business operations across state lines. The state where you form your business will consider your business to be domestic, while every other state will view your business as foreign. Foreign qualification notifies the state that a foreign business is active there.
For example, if your Kansas-based organic dog food company is really growing, and you think neighboring Nebraska will be an excellent market, you’ll typically need to file a “Certificate of Authority” with the state you are expanding to. Many states also require a “Certificate of Good Standing” from your state of formation. Each state charges a filing fee, but the amount varies by state and business structure.
How to Obtain Foreign Qualification
Believe it or not, the process is relatively straightforward to register your company in another state. You will need to submit a Certificate of Authority application (some states refer to it as a “Statement & Designation by a Foreign Corporation”) with the state’s Secretary of State. Most states make their forms available for download from their Secretary of State’s website.
Note that some states require your business to have a Certificate of Good Standing from the state where your LLC or corporation was formed. That means you need to keep up to date with your state taxes and other compliance requirements.
What Licenses and Permits Can Cross State Lines?
Some business services are heavily regulated by the US government. Agriculture, alcohol sales, manufacturing and/or selling firearms, even transporting goods with over-sized vehicles will require special permission from the feds. In this case you’ll need to look into obtaining a federal business license. The SBA has a list of the types of businesses that will need to obtain a federal business license. You can find that list here.
State laws vary with regards to permits and licensing. For example, California law requires a General Contractor’s License to perform electrical work, but in Indiana, city and county governments license electricians and electrical contractors. The end result is the same, but some states require extra permitting, training, or fees. The Small Business Administration (SBA) offers a pretty comprehensive list regarding what steps your business will need to take in its new state.
Does my Business Need Foreign Qualification?
- Does your business have a physical address or presence in the state?
- Does your business conduct business in the state?
- Are you paying employees in another state?
- Does your company hold any assets in the state?
- Have you opened a bank account for your business in this in another state?
If the answer is “yes” to any of these questions, Foreign Qualification is probably right for you business.
What If I Need a Foreign Qualification but Didn’t File for One?
You are legally obligated to foreign qualify your company in states where your business conducts business. If you fail to properly register your company you might face fines and interest for the duration of time your business was operating without qualification. Your business would also be expected to any state taxes during the time your business was open and had not foreign qualified.
Lucky for you, Active Filings provides Foreign Qualification filings in all 50 States, as well as Washington DC and Puerto Rico.
Our Services Include:
- Free Business Name Search
- One Year of Registered Agent Service (required)
- Certificate of Good Standing Obtainment
- Preparation of Foreign Qualification Documents
- Expedited Processing to Get Your Business Legal