Virtual productivity and communication tools make it easy to work and run your business from just about anywhere. You could be based out of New York but have clients in California. The thing is, the exact state of where your company is operating out of can be fuzzy. As a small business owner, you may work with clients, companies and remote teams where you conduct business across state lines.
It can be tricky to figure out if you’ll need to incorporate or register an LLC in multiple states. While you may not unwittingly be going against the law, not properly filing your business in another state when it’s legally required could have you dinged with penalties or leave you unprotected by state laws. Here’s what you need to know if you’re doing business in multiple states.
Running a Multistate LLC
If you do business across state lines (rather than only in the state where you’re incorporated), you may need to register in another state or even multiple states. Additionally, if you are currently incorporated in a state other than your home state, you may also need to register in your actual home state.
This is called “Foreign Qualification.” The term may be confusing, as it sounds like you’re conducting business in another country. The reason why it’s called Foreign Qualification is that corporations and LLCs are considered domestic only in the state that they are registered. So, if you file for an LLC in Pennsylvania, it’s only considered domestic in Pennsylvania and it’s foreign in any other state. Doing business across state lines would put you in this Foreign LLC classification.
The rules for doing business in multiple states can be nuanced and tricky. If you have questions or need help with filing an LLC for your small business in multiple states, Incfile can help walk you through the intricacies of starting your company and filing a Foreign Qualification.
Wendi is a freelance writer based in Indianapolis, IN, with over a decade of experience writing for a variety of industries from healthcare to manufacturing to nonprofit. When she isn't working on solutions for her clients, she can be found spending time with her kids and husband, working in the garden or doing more writing (of the fiction variety).