An important part of your entity compliance is foreign registration in the states where your entity has nexus.
Your LLC or corporation is formed in a state, that is referred to as the state it is domiciled.
Foreign registration is required when you form an entity in one state (state of domicile) and if you have physical nexus in another state. For example, if you live in California and form a Nevada LLC, it will need to foreign register in California where you run and operate your business (even if online).
A foreign entity may also have nexus in a U.S. state and be required to foreign register. If you operate your business through a UK LTD company, it may have to qualify to do business in state in the U.S. also when the company have sufficient nexus. The foreign part in the service title, foreign registration or qualification, means in reference to another state or country.
Common examples of items creating income nexus are an office, employees, and ownership of real estate. Some states will look at stock/inventory (where the marketplace facilitator is not collecting and remitting) to create income tax nexus beyond simple income tax nexus, which is common for e-commerce sellers.
Once you foreign qualify to do business in a state, other requirements may come into play, including filing a state corporate tax return or franchise tax return. We do have CPAs and tax professionals that are able to help you with any tax filings beyond sales tax at the state or federal level.
As an e-commerce seller, you need to determine when you have sales tax nexus (either physical or economic). This creates a responsibility to collect and remit sales tax. Your first step is to apply for a sales tax permit and our sister company, SalesTaxSystem.com will help you with that process.
There are several states that, after you apply for a sales tax permit, a corporate tax return may be required. Many states will have required your company to qualify to do business after you apply for a sales tax permit. We have those states listed as part of our SalesTaxSystem.com training.
Here is a checklist of foreign registration services that are required to properly foreign qualify or register to do business in another state:
- Check Your Entity Name for Availability in the State of Registration. If the name is not available, we will notify you to come up with similar options to register within the state.
- Obtain a Certificate of Good Standing from Your State of Domicile (Formation). In many situations, the Certificate of Good Standing may not be dated less than 90 days prior; some states only 30 days.
- Registered Agent Service for 12 months. Each state requires a registered agent service as the point of contact for service of process in case the company is ever sued (hopefully not). We work with our partner company to provide this service in states outside of Nevada.
- Complete the Forms to Foreign Register/Qualify. The forms will be completed and ready for you to review and complete if only a few basic questions are required.
- Request Additional Documents to Register. Your incorporating documents are required, and, in some cases, additional documents.
- File Your Forms and Documents with the Secretary of State. All your filed forms will be sent to you to sign online via a secure service. We will send them to the state with a check (you would pay the state fees separately) or file online when available.
Follow-up Reminders with Next Steps in Each State. You will have additional steps in each state, from an initial report or annual report, and we will send you an overview. For example, California has a statement of information due and franchise tax fee, which are separate fees.
$280 Per State for All Our Processes (State Fees are Separate)
Get Started Now with this Link. If you are foreign qualifying in several states, change the quantity in the order form to the number of total states. After you order and let us know the states you want to register, we will send you a link to pay the state fees separately
Each you there are two main services, your registered agent service and (if you choose) a service to file your annual report. Annual registered agent fees are $125 and the annual report service (which you are able to file on your own) ranges from $100 to $150 per state.
Questions? Send an email to support@LaunchWithConfidence.com.