Here at Harbor Compliance, we don’t believe in cutting corners.
Business registration with the state should always be done diligently, so that your business or nonprofit obtains limited liability protection, and maintains good standing with the state.
That being said, there are a few ways a clever business owner can save money (and some time) with business registration. Here are three of our favorites:
1) Register in your home state
The state in which a business initially registers is known as the “domicile.” You’ve heard of Fortune 500 companies incorporating in Delaware to save big on taxes. For most small businesses (read: your small business), you probably won’t realize those same tax benefits. In addition to the cost of forming in that state, you will have the costs of registering as a “foreign entity” where you do business, and of maintaining a business in two states.
You’ll save money (and headaches) by forming your company where you live and conduct business. Look up your state’s formation fees in our Information Center. Then, as you grow and add assets or employees in other states, you can expand by registering there as well.
2) Foreign qualify in several states at once
If your business does grow by adding employees or assets in other states, you most likely need to obtain a Certificate of Authority in order to transact business there. This process is known as “foreign qualification.”
While each state has different fees and procedures for foreign qualifying, most of the time, you’ll need a Certificate of Good Standing or Existence, dated within a certain period of time, from your home state, in order to file the Certificate of Authority with the new state.
You can save time and money by using the same Certificate of Good Standing for multiple states (usually photocopies are accepted). In some instances, such as California, you’ll save nearly a month of waiting for a second certificate. In Delaware, you’ll save between $50 and $90 per certificate, depending on the expedite fee.
3) Use a dependable registered agent
In every state where you transact business, you are required to list a registered agent on formation and foreign qualification documents. The registered agent can be an individual (usually an officer of the company), or a commercial provider.
If you use a commercial registered agent, make sure the provider you choose a) has clear, consistent pricing, b) has an address in the state you need, and c) dutifully and reliably serves its purpose.
You’ll save money by using a registered agent that doesn’t raise its rates, and delivers your documents on time. The cost of missing a delivery can be high, even devastating to a small business. Additionally, using the same agent service for multiple states will help keep you organized, and may even earn you a discount with some providers.
Do you have any other tips and tricks for registering your business or nonprofit? Share them in the comments below!