Registering a Foreign LLC
If your LLC is going to be operating or working in a state other than that in which your primary business office is located, you may need to register as a foreign LLC in the other state(s). In this episode, I discuss Foreign LLCs: what Foreign LLC means, when you are a Foreign LLC, and what you have to do if you think you are a Foreign LLC!
What does Foreign LLC mean? The word “foreign,” when we are talking about Foreign LLCs, just means foreign to another State, not necessarily foreign to America. So, if your company is registered as an LLC in one state, but you have interactions, do business, have clients, or travel to another state, you might have to register as a Foreign LLC in that other state.
When is a business a Foreign LLC? Whether or not the circumstances of your business and your involvement in that other state are such that you have to register as a Foreign LLC will depend on the state laws of that other state. Typically, if you are just doing a one-time transaction in another state, e.g. if you have a one-time, short-term client or customer in another state, or if you are doing business in a very short, one-time term in another state, you’re probably not going to have to worry about registering as a Foreign LLC in that state. It’s usually only if you have a continual presence, and you are going to be continuing to do business in that other state, when that state is going to require you to register as a Foreign LLC. Colorado’s statute concerning Foreign LLCs states that a foreign entity (i.e. and entity formed under the laws of a state other than Colorado) has to register as a Foreign LLC if it is going to “transact business” or “conduct activities” in Colorado. In typical legislative fashion, the statute does not define “transact business” or “conduct activities.” (That would make it way too easy for us, right?) But it does give examples of things that are not considered transacting business or conducting activities:
- Maintaining, defending, or settling in its own behalf any proceeding or dispute;
- Holding meetings of its owners or managers or carrying on other activities concerning its internal affairs;
- Maintaining bank accounts;
- Maintaining offices or agencies for the transfer, exchange, and registration of its own securities or owner’s interests, or maintaining trustees or depositories with respect to those securities or owner’s interests;
- Selling through independent contractors;
- Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
- Creating, as borrower or lender, or acquiring, indebtedness;
- Creating, as borrower or lender, or acquiring, mortgages or other security interests in real or personal property;
- Securing or collecting debts in its own behalf or enforcing mortgages or security interests in property securing such debts;
- Owning, without more, real or personal property;
- Conducting an isolated transaction that is completed within thirty days and that is not one in the course of repeated transactions of a like nature;
- Transacting business or conducting activities in interstate commerce; and
- In the case of a foreign nonprofit corporation:
- Granting funds; or
- Distributing information to its members.
What must be done if you think you are a Foreign LLC? The other important thing to note with regard to registering as a Foreign LLC in another state is the requirement of having a registered agent who is physically located in that state. In other words, if you are going to register in another state, the state is going to require you to have an agent for service of process (i.e., a registered agent who is located in that state). So if you are the primary, or only, business owner, you obviously cannot be physically located in that other state; you will then have to find someone in that state, or a company that does service of process services in that state, and register them as your registered agent in that state. So, if you are going to be registering as a Foreign LLC in another state, you need to make sure to have a registered agent available who is located in that state.
Otherwise, in general, filing or registering as a Foreign LLC isn’t really any different from registering as a Domestic LLC . It’s typically just another paper that you file with the Secretary of State, or whatever the agency is that controls business organizations.
If you are unsure if you need to register as a Foreign LLC, I strongly suggested you contact an attorney who is licensed either in your state or in that other state where you might be doing business. This is because a failure to register as a Foreign LLC could result in fines and potentially other problems that could be imposed on you by that other state.
Business attorney Aiden Durham with 180 Law Co. LLC can help you determine if your business should be registered as a Foreign LLC in or out of Colorado. Schedule a consultation to get started or email us confidentially at [email protected].