What is Foreign Entity Registration?
Foreign entity registration is the process by which you register your business in a new state other than the one where it was originally formed, linking the new registration to your existing LLC. Despite its name, it has nothing to do with international business but rather involves registering your business in states outside of where it was initially formed. The state where your business was formed is considered its "home" or “domestic” state and any other state is considered "foreign." This registration may be necessary if you're expanding your operations across state lines and want to ensure compliance with state regulations. Foreign registration happens at the entity level, meaning your LLC will be registered with the foreign state’s secretary of state office, similar to how you set up your domestic LLC. You’ll need to stay compliant with requirements for both your original domestic LLC and your newly registered foreign entity to remain active and in good standing in both states.
Why Consider Foreign Entity Registration?
Foreign registration can be a good option if you plan to continue operating in your current state and you want to register your business in another state to operate there officially as well. You can pursue new clients and deliver services in both the domestic and foreign states. Additionally, you’ll pay fees, file tax returns, and maintain compliance with regulations in both states.
How to Know if You Need to Foreign Register
Figuring out whether to register your business in another state can be tricky, but here are some of the questions you can ask yourself:
- Do you have any employees or regular contractors located in another state?
- Do you maintain an office, storefront or other physical space presence like an office or store in another state?
- Does your business own property or real estate in another state?
- Do you have a business bank account in another state?
- Do you conduct sales or generate revenue in another state?
If you answered “yes” to any of these, it may mean your business has a presence in that state and could need to register. Collective can’t determine or advise whether registration is required, we strongly suggest that you consult with an external legal or tax advisor specializing in multi-state compliance and nexus requirements. However, we can help with the filing process if you choose to proceed.
Getting Started with Foreign Registration
If you find that you need to foreign register your business, Collective is here to help streamline the process. Simply message us using the message center in the Dashboard, and we’ll provide you with a quote. For most states, we can manage this process directly. I. We’ll prepare everything on your behalf, but in cases where submission to the state isn’t possible in-house, we may partner with our registered agent partner, RASI, to complete the filing. Please note that using RASI may incur a separate service fee which is provided on the quote provided for your approval. Alternatively, you may seek assistance with the registration, outside of Collective or submit the filing on your own – if you choose this option, we kindly ask you to provide the foreign registration documents once the state has processed them so we can track the registration for tax purposes and continue to provide compliance reminders on your behalf
There will be filing fees associated with the foreign registration, which we will pass through to you, upon your approval of the quote. The quote will usually include the foreign state registration fees, a certificate of good standing and/or certified copy from your domestic state (required for most foreign registrations), registered agent fees, and/or late filing penalty fees, if applicable.
The process will follow the steps below:
Quote and Approval
A quote will be sent over for your review and approval.
Once approved, form preparation will begin and documents may be sent for your review and signature (if necessary).
Filing and Confirmation
Once the forms have been prepped, and signed, if applicable, they will be filed with the relevant state body on your behalf.
Once the state processes the filings, you will receive a confirmation that your LLC is now foreign registered in the new state. Please note the timeline for this process can vary widely by state.
RASI will act as your registered agent in your new state, unless specified otherwise, prior to the filing. Collective will cover the cost of RASI’s registered agent appointment in one state, included in your membership fee. Additional states would incur an additional yearly fee (shown in your original quote).If you’d like to use a different registered agent, please let us know when you submit your initial request.
Once RASI completes the registration process, please use the following checklist, if applicable, to guide your next steps during a relocation or when establishing your foreign registration.
Change of Address
Once the state processes your filings, complete the IRS change of business address form, sign it and send it directly to the IRS at the applicable address below:
Employer registration (If applicable)
Collective will register you as an employer in the new state, so that we can obtain the state tax IDs which will allow you to run payroll in your new state. If this is for a relocation, we close the payroll tax account in the state you moved from.
Your new tax IDs will be updated in Gusto.
We’ll close the payroll tax accounts in the state you moved from.
Notification
Inform any banks, clients, vendors and government agencies of your LLC's relocation and any changes to your contact information.
Update your business address on your website, marketing materials and other public-facing information.
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.