3 Things to Think About If You Want to Expand the Business Out of State

Foreign Qualification: 3 Things To Think About If You Want To Expand

Success and growth can lead a business to consider expanding operations out of state. However, opening a business in another state requires more rules to learn and regulations to comply with. Here are three things you must remember if the business is ready to grow beyond its home state and you will need to file for foreign qualification.

Businesses Will Need Foreign Qualification

To operate a business in another state, the business needs a certificate from the state that grants it “foreign qualification.” This doesn’t mean the state believes the business comes from out of the country, it’s just a term that refers to a business that started in another state.

A foreign qualification may be called by another name in different states. For example, in New York, this is called a certificate of authority. In Arizona, it’s called a foreign registration statement. In any case, however, it’s the same thing – a document that says you have an out-of-state business legally authorized to operate in that state.

Learn State Regulations

In the same way that different states have their own name for a foreign qualification, they will also have different rules for how to get the foreign qualification. For example, some states require proof that the business is in good standing in its home state. California needs to see a document issued within the last six months, while Georgia needs to see the business has a good standing document from the previous three months. On the other hand, Alabama doesn’t require a certificate of good standing at all. The application process is different for each state, and it’s up to you to learn what’s needed and where.

Familiarize Yourself with Taxes

Just as the application processes are different, so are tax requirements. How the state determines business taxes and the amounts paid will differ when foreign qualification is applied for in another state. Business owners need to learn what the tax requirements will be in any outside states.

Get a Registered Agent

Just like needing a registered agent and address for official documents issued by your business’s home state, another agent and business address will be required for an out-of-state business. Also, remember that while you can open a business in another state, the name may not be available in the foreign state. If there’s already a local business with the name chosen for the business, the state protects the local business name and another name will have to be chosen for the out-of-state business.