The Importance Of Filing For A Certificate Of Authenticity And LLC Foreign Qualification
The Certificate of Authority
An LLC or a corporation only receive recognition in their incorporation state. The term foreign means the company must be incorporated in one state and conducting business in another. The certificate provides the business with the legal right to perform business in the other state. This is the registration process for the company enabling them to perform business in a state other than the one in which they were incorporated. The certificate must be received for every state in which the company will be conducting business. Filing for a certificate is critical because the company is provided with the legal authority and standing required to conduct business in the state.
Failure of the business to comply can impact the Certificate of Good Standing held by the company. This is required to file business taxes, renew the license for the business or secure a business loan. The company must be registered in every state they are conducting or are planning to conduct business. A preparation service simplifies the process by filling out all the paperwork and making certain the company is compliant with the law. The jurisdiction determines the specific process required for obtaining the certificate. There are certain activities determining if the company is conducting business within a different state. If the transactions conducted in the state are not considered minor such as management decisions, the company will probably be considered a foreign entity and be required to register.
The rules for determining if the business conducted by the company is minor or major are fairly simple. The first rule is a physical presence must be established by the company in the state. This is in reference to a warehouse, store or office soliciting the state residents in any way. This may also be in reference to having either bank accounts or employees in the state. The second rule is if state taxes must be paid by the business in a specific locale, the company will be classified as conducting business in the state. When the business is upholding numerous contracts within a state or are selling from within the state, taxes will be assessed. If any of these conditions apply to the company, it is likely a certificate will be required to conduct business within the state.
The Definition of Foreign
Numerous businesses expand beyond their local area or do business internationally through the internet. These companies are conducting business in a foreign state. In order for the business to remain legitimate, the proper paperwork must be filed. A certificate of authority provides the company’s important information to states other than the state in which the company has been registered. This includes the official name of the business, the names of the owners and the legal status of the business such as limited partnership, corporation, (LLC) limited liability company, etc. This certificate is also referred to as a foreign qualification. The word foreign is in reference to any company not organized within the state. This does not have to be an international company.
When a company intends to conduct business outside of the state of formation, the company is required to register. This makes the state aware an LLC foreign qualification is doing business within the state. The same certificate is required for all business entities including corporations, partnerships and an LLC. Each state uses different criteria for determining if the business is required to have a certificate. In some states, a certificate is required if the company is transacting intrastate business. This includes businesses with a physical presence in another state such as sales representatives or warehouses. A foreign qualification is not necessarily the same thing as conducting business internationally. The qualification is regarding the business conducted within the United States.
Since the operating rules of each state are different, proper registration is required to conduct business in another state. When a company begins conducting business in a state outside of their original incorporation, it is important they have the right to perform business in the state. This can only be accomplished by obtaining a certificate. If the state requires the company to have a certificate, there may be back taxes, fines and penalties due if the company does not comply. Due to the extreme importance of the process, the majority of businesses obtain a certificate through a preparation service. This ensures the requirements have been fulfilled and the company is in compliance with the applicable laws. This will eliminate any tax or legal issues in the future.
The Process for Qualification
Although the process is fairly straightforward, it is important to know the requirements for each jurisdiction. In addition to the fee and paperwork, additional documentation may be required to prove the business is current on taxes and in good standing in the state of incorporation. Certain states have a time frame for the application such as thirty or sixty days. The correct steps must be taken for every process. The name of the corporation will be compared with each state’s database to make certain the name is not already in use. If the name is being used, the company must operate under and assumed or fictitious name. This is a (DBA) doing business as name. A registered agent must be chosen in the state. The company must then register for the legal ability to conduct business in the state. This is a lot of the incorporation process and requires the submission of fees and paperwork.
The criteria for filing for a certificate of authority includes whether or not the business has a physical presence within the state, has bank accounts in the state or has employees conducting business in the state. The fee charged by the state must be paid and the appropriate document for the state filed. The business formation status is verified by the certificate through a Certificate of Good Standing from the incorporation state. The company will be required to pay taxes and fees in every state business is being conducted. The Certificate of Good Standing can be obtained through the Secretary of State. This request is filed for the business when a preparation service is hired. This document proves the company is in compliance with the government and tax requirements of the state.
Let a Professional File Your Foreign Qualification Today!
Let a Professional File Your Foreign Qualification Today!
The Most Common Questions
One of the most frequently asked questions is when the business should file for the certificate. The state registration must be filed a minimum of twenty days prior to any business being conducted within the state. This provides enough time for the completion of the paperwork and the state authorities to issue the certificate. The time necessary for filing will vary according to the state and the governing state agency. Providing the required documentation in a timely manner is important due to the multiple steps of the process. The filing can be expedited by the majority of the states when the company pays an additional fee. Another common question is what is required to receive a foreign qualification. A Certificate of Good Standing from the state of incorporation and a copy of the company’s formation are required by most states.
The company will also be required to pay fees for every state in which they want to conduct business legally. Once the certificate has been issued, the business is responsible for meeting the requirements of each state. This includes filing information reports annually with each state. The cost of the certificate is dependent on the filing fee assessed by each state and the cost of obtaining the Certificate of Good Standing. If the business uses a preparation service, an additional fee must be included. The fee for each state varies. The copies of the articles filed by the business are usually returned by the governing state agency immediately by mail. The certificate enables the company to perform business legally in one or more states. Each state requires a separate certificate.
The Benefits of a Preparation Service
The services of a preparation services are designed to help the business complete the process required to obtain a certificate. Some services are available after the certificate has been obtained. This includes:
- Checking the name of the company in each state the company intends to conduct business.
- Preparing and filing all of the documents and paperwork required to qualify for a certificate.
- Obtaining a certified copy of the Certificate of Good Standing for each state in which the company intends to conduct business.
- Mailing all of the completed documents to the business.
- The company can enroll in managed filing services. Once registered, annual reports and franchise taxes will be filed automatically. The reporting requirements for each state are monitored and updated prior to being filed on behalf of the company.
- Registered businesses receive consistent filing alerts for annual reports and franchise tax due once the business has become incorporated. This makes it simple for the business to remain in good standing in the states in which they are conducting business. All that is generally required of the business to file are a few clicks of the mouse.
- The company’s official documents are handled efficiently and promptly for important legal, state and tax documentation on behalf of the business. The services are both discreet and professional. The documents are digitally scanned and emailed for instant viewing by the company.
- The business can track and schedule all compliance events with reminders regarding invoices, upcoming obligations to the state, etc.
- The customer service of the preparation service is professional, friendly and available through email, phone or chat. All questions regarding compliance are answered promptly and efficiently.
- Discounts for conducting business in multiple states.
The Qualifications for Conducting Business in Multiple States
If the company intends to conduct business in one or more states in addition to their incorporation state, the company must be registered in each state as a foreign corporation or LLC. The company is unable to conduct business legally in these states without a certificate. There are a lot of factors the company must consider prior to conducting business in a different state. The specifics of this criteria changes from state to state. It is important to note if the business is not certain if a certificate is necessary, seeking professional advice is strongly recommended. If the company is conducting business outside of their incorporation state, a certificate is required by the law. If the company does not comply to the law, there are strict repercussions.
Failure to comply with the law results in back taxes becoming due for the period of time the company conducted business in other states without a certificate. The business will lose their right to use the court system of the state. This means if the business is sued within the state, they will not have the ability to defend themselves. The only time a business is considered to be domestic is within the state they were originally incorporated. They are considered a foreign entity in all other states. To legally conduct business in any other state, the company must register as a foreign corporation or LLC by filling out and filing the paperwork required by each state. This includes completing the registration process for a certificate in every state in which the company intends to conduct business.
The company must provide a certified copy of a Certificate of Good Standing from their incorporation state. This shows the company has met all the requirements of the state and actually exists. When the filing is made for the certificate, all applicable filing fees required by the state must be paid in full. Annual and franchise tax reports must be filed and paid for the states in which the business has received a certificate. The business is required by the law to have a registered agent in the state in which they were incorporated in addition to all states in which they are conducting business. The foreign state may have additional criteria required for corporations or LLC businesses. Failure to comply with the law has a serious impact including fines and additional fees.