Foreign Qualifications

If your company is incorporated in a particular state, but is conducting business in a state other than the state of formation, the state where the business transactions are taking place may require you to qualify your Corporation or Limited Liability Company (LLC) within the state where the business is being conducted by filing a Certificate of Authority (sometimes also referred to as a Statement & Designation by a Foreign Corporation) with that particular Secretary of State’s office.
Some of the benefits of foreign qualifying your Corporation or Limited Liability Company (LLC) are as follows:

• Formed in a state that is outside of where your business is physically located.
• Doing business in multiple States.
• Opening a bank account in the state you are doing business within.

If you are interested in foreign qualifying your Corporation or Limited Liability Company (LLC), CorpNet™ can help by saving you both time and money with service that is fast, reliable, and affordable in processing the documents required to foreign qualify your company in any state. 

Q: When does a Corporation or Limited Liability Company need to apply for Foreign Qualification?
A: If your company is incorporated in a particular state, but is conducting business in a state other than the state of formation, the state where the business transactions are taking place may require you to qualify your Corporation or Limited Liability Company (LLC) within the state where the business is being conducted by filing a Certificate of Authority (sometimes also referred to as a Statement & Designation by a Foreign Corporation) with that particular Secretary of State’s office.

Q: What if I incorporate in Delaware or in Nevada?
A: Once you decide to form a legal entity, you need to choose a state in which to make your filing.  Most people choose Delaware, Nevada or their home state.  Delaware is often chosen, especially by larger companies, because it has the most developed and flexible corporate statutes in the country and is considered pro-business.  Nevada has also become popular because of its lack of state corporate income tax, franchise tax and personal income tax.  It also has relatively low fees.
Nevertheless, if you have a small business and are going to be conducting a substantial amount of your business in your home state, it will likely be beneficial to incorporate in that state.  If you incorporate out-of-state, such as in Delaware or in Nevada, but do much of your business in your home state, you will have to make a filing to “qualify to do business” in the state if there is a substantial ongoing business or physical presence in that state.  You will then be subject to the same fees, taxes and regulations as if you had incorporated there in the first place, and you will have paid filing fees (and, perhaps franchise taxes) to more than one state.

Example: If you have a small business and are going to be conducting a substantial amount of your business in California, it will likely be beneficial to incorporate in the state of California.  However, if you incorporate out-of-state, such as in Delaware or in Nevada, but do much of your business in California, you will have to make a filing to “qualify to do business” in the state of California if there is a substantial ongoing business or physical presence in the state of California.  You will then be subject to the same fees, taxes and regulations as if you had incorporated in the California in the first place, and you will have paid state filing fees (and, perhaps franchise taxes) not only in the state of California but also to the state of Delaware or Nevada as well.

If you are interested in foreign qualifying your Corporation or Limited Liability Company (LLC), CorpNet™ can help by saving you both time and money with service that is fast, reliable, and affordable in processing the documents required to foreign qualify your company in any state.