What is a Foreign Qualification?
Corporations or Limited Liability Companies ( LLC ) formed in one state can do business in another state. Before conducting operations across state lines, a business may be required to file for a foreign qualification, or obtain authority to do business in that state.
A corporation or LLC is considered to be domestic only in the state in which it was incorporated.
In all other states, a company is regarded as a foreign corporation or foreign LLC.
If your company expects to transact business outside the state in which your company was formed, you may be required to file for a Foreign Qualification.
For example: If your company incorporated in the state of Nevada, but has an office and employees in California (in essence, based in California), then you would generally have to file for foreign qualification within the state of California. In other words - you must apply for authority to conduct business in California.
We can prepare Foreign Qualification documents for your review and submission to the appropriate state agency in any state so that your corporation or LLC may operate as a foreign entity within that state.
MyCorporation can help you file a foreign qualification for your business online for $149
Laws and fees governing corporations can vary from state to state. While you are able to form a corporation in any state you choose, most of our customers choose to form their corporation in the state in which they are conducting business. This is typically the most simple and cost effective way to operate your business for the following reasons:
- Any state that you do business in may require you to file a "Foreign Qualification" if you are not incorporated there, costing additional fees and paperwork. (e.g. If you form a corporation in California, but wish to do business in Arizona, Arizona may require that you Foreign Qualify).
- If you form a corporation in one state and do business in another, you could subject your business to taxation in both states. Many states will tax a corporation that exists in their state, even if it is not doing business there.
There are certain circumstances that could make it beneficial to incorporate in a state other than your home state. If you intend to do business in several different states or if your home state has complex laws or high tax rates and filing fees, you may want to consider forming your business in another state. Delaware and Nevada are commonly recognized as states that are attractive to businesses.
Delaware is recognized as having modern and flexible corporate laws, a business friendly government, and a customer service oriented staff that can process documents and requests more quickly than other states.
Nevada does not charge a state corporate income tax or a personal income tax, and allows for a higher level of privacy for a business and its owner's personal information.
As stated by the Delaware Office of the Secretary of State, Delaware General Corporation Law is one of the most advanced and flexible corporation statutes in the nation. In addition, Delaware courts have over 200 years of legal precedent as makers of corporation law. Further, the state legislature seriously regards its role in keeping the corporation statute and other business laws current. Finally, the office of the Secretary of State operates much like a business rather than a government bureaucracy with its modern imaging system and customer-service oriented staff.
Delaware law requires every corporation to have and maintain a registered agent in the State of Delaware. We can provide you with Registered Agent Services should you desire to incorporate in Delaware.
The Division of Corporations in Delaware offers a variety of incorporation services including "2-hour", "Same Da"" and "24-hour" processing and filing of documents.
Franchise tax - All corporations incorporated in the State of Delaware are required to file an Annual Franchise Tax Report, and to pay a franchise tax. Taxes and annual reports are to be received no later than March 1 each year. The minimum tax is $30 with a maximum of $150,000.
Authorized Shares Method:
- Less than 3,000 shares (minimum tax) $30.00
- 3,001 - 5,000 shares $50.00
- 5,001 - 10,000 shares $90.00
- each additional 10,000 shares or portion thereof $50.00
Delaware Corporation Annual Report - Annual reports are sent to the registered agents in December of each year. A $20.00 filing fee is required for the annual report. Annual reports or reprints may be requested through your registered agent.
The Nevada Incorporation Advantage
- No Nevada State Corporate Income Tax
- No Nevada Taxes on Corporate Shares
- No Nevada Franchise Tax
- No Nevada Personal Income Tax
- No I.R.S. Information Sharing Agreement
- Nominal Annual Fees
- Minimal Nevada Reporting and Disclosure Requirements
- Stockholders are not Public Record
- Stockholders, directors and officers need not live or hold meetings in Nevada, or even be U.S. Citizens
- Directors need not be Stockholders
- Officers and directors of a Nevada corporation can be protected from personal liability for lawful acts of the corporation
- Nevada corporations may purchase, hold, sell or transfer shares of its own stock
- Nevada corporations may issue stock for capital, services, personal property, or real estate, including leases and options. The directors may determine the value of any of these transactions, and their decision is final.
What our Customers are Saying
"This is my first experience with setting up an LLC (or any type of company), so I did not know what to expect. Your website walked me through the process and it was very easy"
"The experience was wonderful and extremely simple using MyCorporation. We really appreciate the fast and easy service they provided for us!"