A corporation doing business in one state when incorporated in another is considered a foreign corporation and must qualify as a foreign corporation to legally do business in that state. For example, a business incorporated in Nevada that wants to do business in California would be considered a foreign corporation in California, and as a result, the Nevada corporation must qualify (or register, depending on the state) as a foreign corporation to do business in California and then becomes responsible for the California state taxes including the Franchise Tax.
“Doing Business” can be nothing more than having a bank account in a state other than the home state.
States generally have a similar filing process to qualify (or register) as a foreign corporation, but some states may require a bit more (please refer to the specific Secretary of State to get the detailed requirements for that state). However, here are the general requirements that almost all states will demand. The Secretary of State will require a foreign corporation to fill out a form, commonly called the Foreign Corporation Certificate or Qualification to do Business. This form will ask for: the name of the corporation, the state of incorporation, the address of the principal office in the state of incorporation, the address of the principal office in the foreign state, and the name and address of the registered agent for that state. Every state will require a foreign corporation to provide the name and address of a registered agent in order to give the state a means to communicate with the foreign corporation. The registered agent (an individual or corporation) must generally reside within the state and provide a physical address (no P.O. Box). The form must be signed and dated by a corporate officer. Also note, there will be a filing fee for registering as a foreign corporation.
Many states also require a Certificate of Good Standing (or “Certificate of Existence” depending on the state) to be filed by the foreign corporation along with the form described above. This Certificate is used as evidence that the foreign corporation exists and is authorized to conduct business in that foreign state / country. This Certificate is issued by a state official from the state of incorporation.
Some states may require the foreign corporation to list its assets and liabilities as well as the assets and liabilities within the state it wishes to qualify to do business in. Also, some state may have stricter requirements regarding the registered agent.
Always consult an accountant or attorney regarding the tax implications of conducting business in another state.
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