Foreign LLC – What is a Foreign Limited Liability Company?


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Limited Liability Company is always based on state rules. It is formed in a particular US state where it has the main operational center. However, if at some point of time in the future, the business owners decide to expand the Limited Liability Company beyond the home state borders and in other states, it will be entitled as Foreign Corporation or Foreign LLC. What is a foreign limited liability company?

foreign llc

For example, an LLC is formed in the state of Michigan. And now, it wants to expand the business to Connecticut or New York. Under such cases, the LLC will be termed as a foreign Limited Liability Company.

Domestic LLC VS Foreign LLC

A foreign LLC and a domestic LLC are almost the same, with the only difference being in their workplace. When an LLC is registered, it should be done under a particular state in the US. If companies operate in the same state as the home, they are termed domestic LLCs.

However, if the business is extended to a different state other than the origin, the Liability company will be known as a foreign LLC. This is because, in terms of the state, the LLC company isn’t formed there and has its origin in some states.

This is the major difference between domestic and foreign LLC. But, apart from this, certain meager facts are also there, which set these two apart, be it the cost of forming the company in another state or the legal documents needed to do so.

Need to form an LLC as a “foreign” entity

Even though several liability companies have been set up as a foreign entity in many states, a question always lingers in the air- why it is necessary to start the business as a “foreign entity” in another state.

When a liability company wants to operate in another state other than the home state, with proper registrations, it will be able to transact the business under a foreign government. Moreover, declaring the LLC as a foreign entity will allow the public to gain more information pieces about the business, starting with the name, member names, business address, registered agents, and so on.

Apart from this, once the company fulfills all the requirements of a foreign qualification, the government will be able to impose the taxation and legal rules on the same so that no unfair and biased judgment can be passed.

States Where Foreign LLC is formed

Foreign LLCs can be formed in different US states, like Connecticut, Michigan, Oregon, New York, California, Vermont, West Virginia, Kansas, Indiana, Arizona, Georgia, and so on. Every state almost follows the same rule for forming the LLC. However, minute details are there, which vary according to the state government. To know more about those requirements, you can hire a professional consultant like GoDaddy for your foreign LLC.

Qualifications to Form a Foreign LLC

People usually start to plan for a foreign LLC without considering when to file the application for the same. If you want your foreign application to be accepted, you must pass the following foreign registration requirements.

  • Having a business bank account
  • Principal office location, warehouse location, or any other dedicated site
  • Certificate for ownership of property
  • A representative in case the company has a distributor or manufacturer
  • Employees working in the company

How to Form a Foreign LLC?

Time needed: 30 minutes.

Here are the simple steps to follow when forming a foreign LLC.

  1. Choose a business LLC name

    The first step towards forming the foreign LLC is deciding the name of the company. The business name should be such that it doesn’t coincide with any existing corporation or LLC in the state, and also no keyword that would signify a government’s body. You can use popular business name search tools from professional consultants like GoDaddy to make sure your chosen name is legal and acceptable.

  2. Appoint a registered LLC agent.

    What follows s hiring a registered agent to become your business’s first point of contact. The agent will be liable to carry on with all the taxation and legal works on behalf of your foreign LLC.

  3. Filing a certificate of existence or certificate of good standing

    A certificate of existence or a certificate of good standing is essential to start up a foreign LLC. According to this document, it is proven that the company has met all the compliances and requirements stated by the government.

  4. File for the certificate of authority

    Filing for the certificate of authority is the final step for forming a foreign LLC. This document will verify every operation and detail about the LLC, just like the Operating Agreement does for domestic corporations.

What if You Don’t Register as Foreign LLC

If you are thinking about forming a foreign LLC, you may be wondering: what happens if you don’t register it in your state? If you don’t, you’ll face hefty fines and penalties. Not only that, but there are also tax implications. Read on to find out how you can avoid these pitfalls. You’ll be glad you did when you’re done reading this article!

Not all states require foreign LLC registration. Check with the state’s office that oversees corporate registration for information on which requirements apply. In addition, you should consult an attorney in the state where you plan to operate. Some states do not require a registration fee for the first year, but you’ll have to pay yearly renewal fees as your business grows. The fees may vary depending on the state you’re in.

Once you’ve decided to register as a foreign LLC, you’ll have to follow the state’s procedures to become a registered agent. By doing this, you’ll be shielding your other operations from legal liabilities. But it is also crucial to know what is involved in filing a foreign LLC. Luckily, Nolo offers comprehensive information on the process. And if you’d like to avoid legal issues later on, you’ll be able to benefit from our online resources.

First, you’ll need to register as a foreign LLC in the state where you conduct your business. To be eligible for foreign LLC registration, you must have a physical presence in the state, employ people and hold regular meetings there. You’ll also need to establish a bank account, office space, and other business license in the state where you want to do business. In addition, you’ll need to have a registered agent in the state where you conduct business. Then, you’ll need to hire employees in the state where you intend to operate, and you’ll need to find property in that state.

Another example of a foreign LLC is a business that is registered in one state but conducts business in another. In other words, an Ohio-registered retail home decor business is now operating in Pennsylvania. If the owner wants to operate in Pennsylvania, the Ohio-based LLC needs to register as a foreign LLC in New Jersey. In the same way, an accounting firm formed in Delaware must register as a foreign LLC in New Jersey.

There are consequences for failing to register as a foreign LLC in the state where you’re incorporated. For example, if you fail to register as a foreign LLC, you could be liable for back taxes plus penalties. Not only that, but your limited liability may be canceled. Additionally, failing to register as a foreign LLC in Florida may result in a company’s limited liability status being voided.

When you are filing for a Florida foreign LLC registration, you must complete and file the required forms. You need to submit a Certificate of Existence, your application for foreign LLC registration, and a cover letter. Upon approval, you will receive an acknowledgment letter confirming that your foreign LLC is now registered in Florida. You can choose to add certified copies of these documents to your filing fee. If you decide to pay for the additional services of a certified copy, make sure you add the required amount.

F.A.Qs

What is the cost of forming a foreign LLC?

The cost of forming a foreign LLC varies from one state to the other. However, this fee is much higher than the registration cost of the domestic LLC. Apart from this, the LLC will be entitled to pay a franchise tax and an annual fee.

What happens if the LLC doesn’t have a foreign qualification document?

In case your LLC doesn’t have the proper documents for foreign qualification, you will not be able to pay the taxes, open a bank account, hire employees, and file taxes in the concerned state.

In Conclusion

Having a foreign LLC in any of the states involves a series of paperwork and filing procedures. Before you form your foreign LLC anywhere in the United States, make sure you get all information regarding filing your LLC beforehand. Also, it is important to know about the restrictions on foreign businesses in a particular state before you start your foreign LLC in that state.

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