Foreign entity registration is confusing for many people at first. This is because, although the term includes the word "foreign," it does not have anything to do with conducting business in other countries. If you are considering foreign entity registration for your entity, it is important to know exactly what it is, how your business can benefit from it, and what you can expect through the process. Also, you will want to make sure that you are conducting your business legally and have as much protection as possible so you do not risk losing it or causing a lot of damage to your personal finances in the process. This article can help you determine whether or not it is right for your company while also helping you determine if your entity is eligible for foreign entity registration.
Foreign entity registration is the process of registering your entity in one state to do business in that state. The only state that your entity is not foreign to is the original state you formed your entity in. You remain foreign in all other states by virtue of the fact that your entity has been formed and complies with the rules of another state. To determine if you need to pursue this type of registration, you may need to look at what the definition of "doing business" in another state actually is and if it applies or will apply to your entity in the near future.
There are many different factors that are taken into account when determining if you need to have a foreign registration in that state, but there are some basic questions you can answer to make a broad determination:
Do you have at least one or more employees in another state?
Do you have a physical presence in another state?
Do you take orders in another state?
Do you have a business bank account in another state?
Does your entity own any property or real estate in another state?
Do you earn revenue in another state?
Do you pay taxes in another state?
If you need a foreign entity registration after your onboarding with Collective is complete, email us at [email protected] and we'll provide you with a quote. For some states, Collective is able to handle this process. If we are unable to assist directly with the filing, we can connect you with our partner RASI who can help.
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.