When forming an LLC in the United States, you can operate in the state of formation, as well as in other U.S. states. To do so, the LLC must be registered in every state it wishes to operate in. When a foreign LLC is formed, it is not that it is operating outside of the United States. Instead, it means that it is operating in a state other than the one it originally formed in. This means that it is “foreign” to the new state.
What is the Difference between a Foreign LLC and a Domestic LLC?
Domestic LLCs are those that are operating in the state that it was originally organized. Typically whatever state you are operating in will be your domestic state. Foreign LLCs are those from another state. If your business begins doing business in another state through registration, it becomes a foreign business registration.
The Definition of “Doing Business”
Not all LLCs must be registered in a foreign state. To know if you should register your LLC as a foreign entity, you will need to understand the definition of doing business. Typically you are doing business in another state if you have a tax nexus in that state. The tax nexus is a connection with a state for tax purposes.
When Does an LLC Need to Register as “Foreign”
Every state has its own laws that regulate which LLCs must register as foreign. Not all states need to have formal registration, but Florida does. You will need to pay the initial filing fee, as well as renewal fees on an annual basis. You will need to register as a foreign LLC in Florida if the following applies:
- You have a business bank account in the state of Florida
- You sell products in the state through a distributor or an agent
- You have an office or a manufacturing/distribution facility in the state of Florida
- You have a retail store in the state of Florida
- You own property in the state of Florida
- You transact business or holding meetings in the state of Florida
How to Register a Foreign LLC
Registering a foreign LLC is different in every state. Typically though, you will need to file two specific documents, and pay a filing fee to register your LLC. When it comes to registering a foreign LLC in Florida, you must supply the Division of Corporations a Certificate of Existence from your home state. This must be less than 90 days old. You should also have the Certificate of Good Standing.
Foreign LLC Fees: How Much Does it Cost to Start a Foreign LLC?
Filing a foreign LLC will cost, and the foreign LLC fees vary by state. Various states may charge anywhere from $100 to $750. In the state of Florida, a standard LLC filing fee is $138.75. For a foreign LLC, there is a $100 filing fee, and a $25 registered agent fee, which is a total of $125 to register a foreign LLC.
Who Should Seek Foreign Status?
If your LLC is doing business in the state of Florida without a legal foreign LLC permit, then there will be consequences. Doing business in a state where you are not properly registered can mean you will end up with penalties and other costs. States typically want every tax dollar in the state that they deserve.
If you are doing business in Florida then you will need to register with the IRS and pay taxes. Otherwise, you can have your LLC dissolved, and have a lien placed against you for the taxes you owe to the state.
Why You Should Hire a Business Lawyer to Form a Foreign LLC
When you form an LLC there are various requirements and complicated processes to follow. This is why it is very important that you take care and do so properly. The same can be said regarding forming a foreign LLC. Using a business lawyer can help make this situation easier by helping you with paperwork, and by helping you stay in compliance.
You can also utilize a business lawyer as your registered agent. This is required to run an LLC in a foreign state. If you hire a lawyer in the state of Florida then they can act as your registered agent, remind you of compliance fees, and ensure you take every step necessary to run your foreign LLC properly.