By Attorney Edward Jesson

A question we frequently get from business owners, small and large alike, is whether they need to register their business in other states. The answer is, as usual, “it depends.” The process of registering your business in another state is often referred to as “Foreign Qualification”. While the laws vary from state to state, the following is a very general guide to whether you need to go through the foreign qualification process for your business.
First of all, depending on the state, there can be serious ramifications for not registering your business in a specific state in which you are doing business. These can range from financial penalties to losing your business’s limited liability status, exposing you, as the individual owner, to liability in that state. In some states, it can also mean that, if your business is not properly qualified to do business in that state, your business is not permitted to bring legal action in that state. For example, if your business wished to enforce a contract in court in a state in where your business is not properly registered, your business may not be able to bring that lawsuit.

To determine whether you need to go through the foreign qualification process, the important question you must ask yourself is whether your business is “doing business” in that state. Again, the rules on this from state to state vary, but there are some general things to look out for when asking yourself that question:

• Does your business have a physical presence or employees in that state?
• Do you frequently conduct in person meetings with clients in that state?
• Does a significant portion of your business’s revenue come from that state?
  
  

Some examples of things that would not typically require you to go through the foreign qualification process are:

• Taking online orders from another state;
• Sales generated by independent contractors in that other state; or,
• Holding annual corporate or member/manager meetings in that other state.
  
  

Unfortunately, the list above is not exhaustive and there are many different definitions of “doing business” depending on the foreign state. However, it is important to note that, despite the differing rules, it is important for your business to research the state requirements and follow those rules when transacting business in that state.

If you have questions about doing business with your LLC or corporation in another state, the attorneys at Jesson & Rains can assist you.

Our clients are busy and they sometimes forget to keep their information updated with the Secretary of State’s Office or file their annual reports; they pay for a registered agent who does nothing more than forward their mail; and they sometimes fall victim to scams like this and this. 

We’re offering a yearly plan that includes serving as our client’s registered agent and filing their annual report, among other things.  A description of the plan is attached to this email.  This plan helps to ensure your privacy (if your business is ever sued, the lawsuit will be delivered to our office’s address); you will be less likely to fall victim to a scam (we will sort through and destroy junk mail); you will be more organized and have less paper (we will scan and forward your mail immediately to your attention after sorting); and we will ensure that corporate records and Secretary of State records are kept up to date.
 
We’re also offering an upgraded yearly plan that includes unlimited access to attorneys throughout the year.  No more billing for .1 emails or .2 telephone calls.  We want to encourage people to contact us anytime they need us instead of being afraid to get a bill from us. 
 
This is a continued effort from us to offer flat fees instead of hourly billing.  Annual reports are due April 15, and they can be filed now, so this is a great time to switch over to having Jesson & Rains handle it.  Please contact us if you’re interested, and please forward to any busy business owners you think may need our help!