What is Foreign LLC and How to Register a Foreign LLC in Any State

Domestic vs. Foreign LLC | What is the Difference?

If you have registered an LLC in one state and also operate your business in that state, your LLC will be called a domestic LLC. Generally, when we talk about LLC, we refer to domestic LLC. For example, you have formed an LLC in Virginia and also transact your business in Virginia; your Virginia LLC will be a domestic LLC.

On the other hand, after creating an LLC in one state, you are operating your business in other states as well; you will register your LLC as a foreign LLC in all those states where you are transacting business. So, for instance, after forming an LLC in North Carolina, you are also conducting business in Michigan, you will register a foreign LLC in Michigan.

Why Do You Need to Set Up a Foreign LLC?

You’re a business owner and have already formed an LLC in your home state. Then why set up a foreign LLC in another state to operate your LLC there? What are the benefits of having a foreign LLC? 

Well, each state has its own rules, and to conduct business in a specific jurisdiction, you are bound to comply with the state law. The state authorities require LLCs that were not initially formed in those states to register as foreign LLCs to: 

• Meet the state law
• Follow the state-specific regulations 
• Fulfill tax obligations 
• Stay compliant by submitting LLC annual report and fee 

When Should You Register as a Foreign LLC?

Doing business in another state doesn’t necessarily mean you have to register an LLC or corporation there. Many companies operate as unincorporated businesses, such as sole proprietorship or general partnerships, which do not require state registration.  

Let’s suppose you have started your online business that deals in kitchen items as Ohio LLC. Though the maximum of your sales come from Florida, you probably don’t need to register your LLC in Florida. You see, getting your sales from a specific state isn’t a criterion to register a foreign LLC. 

However, if you want to reduce your shipping charges from Ohio to Florida and plan to open a warehouse in Florida, state laws come into play here. You probably will need to set up a foreign LLC there.

Generally, it is hard to say what types of business activities qualify your business to register as a foreign entity. Moreover, each state has its own rules, so we can not draw a hard and fast rule here. So, visit the secretary of state’s website to get the exact information related to your foreign qualification. 

Typically, apart from your home state, you should register as a foreign LLC if any of the following is true:

• Your business has a physical presence such as warehouses, offices, or retail stores in that state.
• You have a service-based business such as cleaning, landscaping, construction, etc., and employ workers in that state.
• You regularly hold in-person meetings with investors, managers, or clients in that state.
• You have a business license from the state.
• You have a property like a fleet of delivery vans in that state.
• You have a business bank account in that state.

Revocation of Authority to Conduct Business

If a foreign LLC does not comply with the state law or fails to fulfill its obligations, the LLC’s authority to do business in that state may be revoked by the administrative act of the state filing officer.

Some of the reasons for revocation of authority to conduct business as a foreign LLC are given below:

• Failure to pay LLC taxes,
• Failure to pay LLC fees, 
• Failure to timely deliver an LLC annual report,
• Failure to pay penalties owed, 
• Failure to appoint and maintain an agent for service of process (registered agent) 
• Failure to file a statement of change of agent or address

An LLC that has been administratively revoked may apply for reinstatement to resume its operations. However, you can only reinstate your LLC within a certain number of years after revocation.