4 Ways to Foreign Qualify Like The Pros

Congratulations, your business has grown, and it’s time to foreign qualify! While the process takes time, and costs money, there are a few shortcuts that can benefit your business.

If you are unfamiliar with “foreign qualification,” please first read, “What Is Foreign Qualification.”

Once you’ve brushed up on some basic FQ knowledge, here are a few of our favorite tips for doing it properly, thereby saving your business’ time and money.

1)   Research State Requirements

Before you expand into a new state, research its requirements on the Corporations Division website.

Make sure to find out:

-The proper form(s) to file (Application for Certificate of Authority)

-The correct fees and payment method

-Documents from your home state (Certificate of Good Standing, certified copies)

-Filing methods (online, mail, fax)

-Oddities (original ink signatures, cover letters, duplicate filings, etc.)

If it sounds like a lot of work, you’re right. Every state’s requirements are different, and the state can reject a filing for any missing component. A rejected filing isn’t the end of the world, but it can hurt your business.

Once you’re a pro, you’re on your way to being like this guy!

2)   Appoint a Registered Agent Before You Start

In each state you wish to foreign qualify, you are required to maintain a registered agent. The registered agent is a physical address, which receives legal notices and government documents for your business.

When filing the Application for Certificate of Authority, you must designate an individual or a commercial registered agent on the form. If you don’t, the filing will not be approved.

Make sure you appoint or hire a responsible registered agent to meet the state’s requirement. Some agents even help you with the foreign qualification filing itself (hint, hint).

3) Register in Several States Simultaneously

This only applies if you need to foreign qualify in multiple states.

In most states, in order to obtain authority to transact business, you must show that your entity is currently in good standing. To demonstrate this, each state issues a Certificate of Good Standing (aka Certificate of Fact, Certificate of Existence, or Certificate of Status) for the entity. This certificate must be dated within a certain period of time, anywhere from 30 days to 6 months.

To obtain this certificate, you can expect to pay a fee to the state (anywhere from $5-$90). In many states, you can obtain it immediately online; in others, such as California, you could wait up to a month to receive it.

Use this knowledge to plan ahead. Save some time and money by using the same certificate (usually a photocopy) to apply for authority in several states. Using a national registered agent can also save you time and money.

4)   Research Additional Requirements

Congratulations, you’ve obtained a Certificate of Authority to transact business in another state!

But are you done? Maybe not. You may still need to register for sales or corporate tax, and obtain business licenses or special permits.

For example, in Washington D.C., most businesses are required to obtain a Basic Business License. In New Jersey, it’s the NJ-REG tax registration form.

Many of these additional registrations depend on your line of work and your activities in the state. For that reason, you should check with the state to determine requirements, or use the SBA’s license and permit lookup tool.

As you can tell, there’s a lot of research and work that goes into foreign qualification, but it’s important! A rejected filing or failure to be compliant can jeopardize your business.

Our number one priority is helping your business stay compliant. If you need assistance with any of the above steps, or managing the whole process, give us a call!