Foreign state qualification

GeorgeAGeorgeA Posts: 3subscriber
edited July 2006 in Business Planning
Hi all,Does anyone know wether or not you need to be qualified as a foreign company in a state you do business with ?E.g. if my company is incorporated in Delaware and I get a customer in California, do I have to qualify my company in the state of California as a "foreign" company? I.e. in general, if I have customers in every state of the US, do I have to be qualified in each one of them ?Would be eternally grateful for any pointers that would help me solve this.Thanks,George.

Comments

  • nrealestatenrealestate Posts: 1subscriber
    George,
    I do not believe that you have to be incorporated in that state unless you are in that state doing business.  For example, if you had an internet business and your customer lives in California, you do not have to be registered with the California Secretary of State. If you have an office in California, you must be registered as a Non-Resident Corporation in California. You also must pay taxes to that state. So, I understand that incorporating in Delaware has awesome tax advantages, but make sure that the state that you will be operating out of does not have huge tax fees for you to do business there. I am forming my business in Delaware also.  I have heard that Nevada is good, but I have also heard that they really get you in other ways. Therefore, I agree with Delaware over any other state.  Let me know if you have any other questions.
    Natasha F
  • NuevolutionNuevolution Posts: 30subscriber Bronze Level Member
    No you don`t need to incorporate in every state unless you have a physical address in that state. Only under those circumstances would you have to register as a foreign corporation. Natasha explained it
  • GeorgeAGeorgeA Posts: 3subscriber
    Thank you Natasha and Edgar,OK, so as I understand what you`re writing, the only time when you must register as non-resident corporation in a certain state(foreign state qualification), is when you have a physical presence in that state ? I always read "doing business in the state" would translate to my case, since customer is in the respective state.Thanks,
  • RojgieanRojgiean Posts: 0subscriber
    No you don`t need to incorporate in every state unless you have a physical address in that state. Only under those circumstances would you have to register as a foreign corporation. Natasha explained it
    This is true in most cases.  The exception that I know of is your state of incorporation and your home state.  If you incorporate in Nevada or Delaware (Two "protection" states) then you must have either a physical address of your own, or a "native representative" in that state filing on your behalf.  If you also attempt to run local sales within your own state, even if from your home -- many states require you to also file as a "foreign" company, even though that`s where you live -- due to the fact that the company is actually incorporated from another state!  My advice is to do a little research, and if you can`t/don`t understand it, or want to "play it safe", check with your lawyer.
    GeorgeA wrote:
    Thank you Natasha and Edgar,OK, so as I understand what you`re writing, the only time when you must register as non-resident corporation in a certain state(foreign state qualification), is when you have a physical presence in that state ? I always read "doing business in the state" would translate to my case, since customer is in the respective state.Thanks,
    This is the way I understand it, just remember that many states also count your own HOME address as a "physical address", if you do much work from home.  The major exception that I have found to this (in most of the states that count your home as a business address) is when you are running a business based in majority (Over 50%) via the internet.  Online ventures, due to their nature, are currently exempt from many of the "confines" of traditional business.
    I would still check it out before starting a new venture, due to the fact that there is currently a large amount of government hoo-ha about this issue.
     
    I hope this is useful in helping resolve your quandry, GeorgeA!
  • patentandtrademarkpatentandtrademark Posts: 103subscriber
    what are the consequences of not registering when required to do so?
  • RojgieanRojgiean Posts: 0subscriber
    I`ve heard of everything from fines to actually losing your business to the governement, due to non-compliance.  Not real sure if this answers your question or not... I tend to follow the later advice, and have my lawyer look into it for me! 
  • NuevolutionNuevolution Posts: 30subscriber Bronze Level Member
     I think if you do that, It is much easier to peirce your corporate veil, and I think you can loose your Corporate Status.. I think if you want to do that is better to talk to a CPA... But don`t try it.. Just to be on the safe side..
    My advise... DON"T DO IT!!!
  • IncManIncMan Posts: 1subscriber


    George,


    If you are only connected to CA by way of one client and you do not have a physical location there in CA, employees there in CA, warehouse there in CA or assets under the corporation in CA, no you do not have to be registered there. 


     


    I read the replies and a lot of generalizations were thrown out that could in fact cause a default judgment for sure if legal action was perused from the States mentioned in regards to not filing there just because you don`t live there.


     


    I incorporate entities on a global level as a living.  My 50k entities we currently act as RA and over 140k we incorporated to date has taught me a great deal on the subject.


     


    Inc Man...

  • infiniqueinfinique Posts: 0subscriber Member
    Try having an Internet business. That way, you will have minimal cost and not restricted by interstate laws.
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