Regardless of what it is called in any given jurisdiction, seeking foreign qualification before conducting business operations outside your domestic state of formation is essential. Before conducting business in any jurisdiction, it's important to ensure that you have met all local requirements. The foreign qualification process ensures that your business is legally compliant without having to start from scratch and register a new domestic business in every state where you plan to operate.
What Constitutes "Doing Business" in Another State?
As a general rule, you should seek foreign qualification in any state you plan to do business in that is not your domestic state of formation. However, when it comes to defining what constitutes doing business in another state for purposes of foreign qualification, the answer is not always so simple. Below are some examples of activities that may rise to the level of doing business, thereby requiring you to seek foreign qualification:
Having a physical presence, such as a storefront, warehouse, manufacturing facility, or office location, within the state.
Employing workers who perform their job duties within the state.
Selling products or providing services, either in-person or through online channels, within the state.
Regularly entering into contracts or having ongoing business relationships with individuals or other entities located in the state.
Conducting marketing or advertising campaigns directed toward consumers within the state.
Maintaining bank or other financial accounts for the business within the state.
Note, however, that the definition and requirements for what constitutes doing business will vary from state to state.
How to Register an Existing Business in Another State
Registering an existing business in another state through the foreign qualification process will typically involve several steps.
1. Research Local Requirements
Again, it's important to remember that the requirements, forms, and fees for foreign qualification will vary from state to state. Thus, be sure to research the local requirements of any states where you plan to expand your business before getting started.
2. Check Availability for Your Business Name
Next, check the state's business registration records to ensure that your business name is available for use in the foreign jurisdiction. Most states will not permit foreign qualification if your business name is the same or confusingly similar to another business name already registered with the state. If your desired business name is unavailable, you may need to select an assumed or fictitious name for purposes of foreign qualification and conducting business in that particular state.
3. Obtain the Necessary Documentation from Your Home State
When applying for a foreign qualification in any new state, you will typically need to provide documentation confirming that you validly formed your business in compliance with the laws of your home state. This documentation is commonly referred to as a Certificate of Existence or Certificate of Good Standing, and it can typically be obtained through the Secretary of State or equivalent state agency.
4. Appoint a Registered Agent
Most states will also require your business to appoint a registered agent. Notably, however, this registered agent must be located within the state. Thus, if the registered agent appointed in your domestic registration filings is physically located in your home state, you may need to identify and appoint a new agent who is present in the new foreign jurisdiction.
5. File and Pay
Once you've prepared your application and any supporting documentation, you are ready to submit it to the appropriate state agency, along with the requisite fee. Once your foreign qualification is approved, you can legally conduct business in your new state and continue to grow and expand your business operations.
