Foreign (and Not So Foreign) Companies | Menlo Park Business Lawyers

When you set up an entity for your business, whether it’s a Corporation, an LLC, or something else, that is something that you do in a particular state.  What happens, then, when a company does business in more than one state?  That’s where the concept of a Foreign company comes in.

Many people are initially confused by this term, because it sounds like it involves international business.  But since companies are organized on the state level, once you cross a state border, your company is “foreign” to that new state.

Why is this important?  Well, if your foreign corporation is doing business in a new state, you may need to register it with the Secretary of State in that other state.  In most cases, you will also need a registered “agent for service” in the new state, so that if anyone needs to sue you, they have someone to serve the papers on.  And in some cases, you may be subject to taxation in the new state, though the details of that are often complex and should be reviewed by a tax advisor familiar with each state’s rules.

Each state’s rules differ, but in most cases, if you want to do business in a new state, you will need to get documentation from your company’s home state proving that it is in good standing, then provide that information to the new state, along with an application (and of course an application fee).

Not all business in a new state requires registration.  Usually, you only need to register if you are doing “intrastate” business.  The rules regarding what qualifies as intrastate business that requires registration are complex, and should be reviewed carefully before making the decision whether or not to register.

One thing to keep in mind, though, is that the rules for registration and the rules for taxation are not necessarily the same.  You can be subject to state tax without needing to register in that state, or vice versa.

The rules for interstate commerce can seem daunting, but with a little assistance, you can get over this hurdle and pay attention to the business you’re in.  If you need that assistance, please contact our San Francisco Bay Area law firm.