Foreign Limited Liability Company

//Foreign Limited Liability Company

Foreign Limited Liability Company

When thinking about the notion of foreign limited liability company, many people jump to the obvious conclusion of a company created outside U.S. since this is what usually “foreign” means. But in this case, things are a little bit different. Logically speaking, if a company would be created outside U.S., we would not be calling it a “limited liability company”, as we name certain business in U.S., but we would use the official business form of organization from its country of origin.

In the case of what we call “foreign limited liability” company, we consider it to be foreign by reference to the state in which it does business, and not a country. Thus, a foreign limited liability company is a company create in a state of the U.S. doing business in another state and considered as a foreign limited liability company by the state in which it chooses to do business while not being created there. An LLC that carries business in the same state where it has been formed is therefore considered to be a domestic LLC.

Foreign LLC Registration

In order to be able to carry business in another state than the one in which it has been formed, an LLC needs to register with the other state and will such be considered as a foreign limited liability company.

As when registering a domestic LLC, the process of registering a foreign LLC includes in most states mostly the same steps of filing a registration form together with a filing fee. However, differences might exist depending on the state you are filing with, so it is important to find out exactly what documents you need to file and which are the steps of the process for the specific state where you want to carry business.

Your business is flourishing and you’ve made plans to carry on business outside the state where you have initially formed your LLC. Do you really need to register as a foreign LLC? In most cases, the answer is yes. But as in any other case, there are also exceptions to this one.

There are exemptions from this requirement offered by some of the states, but there is no general one, so you need to consult with an attorney before filing for a foreign LLC, to find out whether it is really necessary or not. For example, while Texas requires you to register as a foreign LLC if you intend to “transact business” in Texas, state legislation doesn’t define very clear what “transacting business” means. In the same time, Texas legislation provides you with a list of activities which are not considered as being “transacting business”. If your activities are on that list, you might not need to register as a foreign LLC.

Similar to the process of filing for a domestic LLC registration, when filing for a foreign LLC you will be required to pay a filing fee. As the process of filing, the fee might also differ depending on the state where you need to register. Is it important to find out how much is the registration fee and also the annual renewal fee, since some states charge more for foreign LLCs than for domestic ones, and it might have more impact on your budget than you expect.

Not filing for foreign qualification exposes you to the risk of stiff penalties and fees and if you are sued you have no legal base for defense in that state’s court.

By | 2019-02-19T11:14:44+00:00 June 20th, 2016|Limited Liability Comapny|Comments Off on Foreign Limited Liability Company

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