Do You Have a Domestic LLC or Foreign LLC?
A domestic and foreign LLC refers to the state where the LLC is created. A company that is registered as an LLC in Michigan and does business in Michigan is operating as a domestic LLC. If the same Michigan company is doing business in Illinois (a physical presence), it is operating as a foreign LLC in Illinois.
This commonly comes up when LLCs are formed in States with business-friendly tax laws but do business in their home State. It may also occur when a business starts expanding into other States. A foreign LLC is required to register with the Secretary of State in the foreign state. The LLC certificate (and other documents) issued by the home state will be needed.
The purpose of registering is to meet the regulatory and tax requirements of the foreign state.
Operating in a state generally means:
- Having a bank account in that state.
- Selling in that state through some party directly tied to the LLC (a distributor or rep).
- Owning property (real estate or a fleet of trucks or example) in the state.
- Having offices, facilities, or holding regular meetings in the state.
These hallmarks also vary by state and should be available at the Secretary of State’s office.
Not sure if you have a domestic or foreign LLC? Contact us and talk to one of our business experts.