What is Foreign Qualification?
Any business that wants to have any kind of physical presence in a state other than the one it was formed in will have to complete a foreign qualification. This process allows them to register their business so it may operate within the state. This is required no matter the specific type of business or its goal within the state – if there is a physical presence, it must foreign qualify.
Why Does A Company Need Foreign Qualification?
Why You Need To Do It – If your LLC or corporation plans on having any employees working in any capacity within Michigan, it must foreign qualify. Compliance requires that all businesses with a physical presence in the state go through foreign qualification.
When Should You Do It? – The sooner you do it the better. It’s important to start early in order to avoid any potential delays. Generally, you will need to receive Michigan foreign qualification if your company falls under any of the following criteria:
- Has a physical presence in Michigan
- Buying a property there
- Have remote employees
- Accepts orders in Michigan
- Owns a bank account in Michigan
What Happens If Your Entity Does Not Foreign Qualify?
Failure to foreign qualify means that you will be unable to bring a lawsuit forth in the state. Additionally, you may face numerous penalties and fines that can reach as high as $10,000. You may also face penalties and fees related to back taxes.
Steps To Obtain Foreign Qualification
There are several steps that must be taken in order to receive Michigan foreign qualification. These steps include the following.
1. Obtain Certificates – You must secure a Certificate of Good Standing from your company’s home state. Then, you will have to file an Application for a Certificate of Authority to Transact Business or Conduct Affairs in Michigan. The form name is the same for both Corporations and LLCs but the form to fill out is different. Be sure to download the correct form from the Michigan Department of Licensing and Regulatory Affairs.
2. Collect And Submit Information – The form will request all basic information from you that you would provide to ensure your registration.
LLC
- LLC name
- An assumed name if the original name is unavailable
- The name of the home state
- The original date of formation
- The duration of the LLC if not perpetual
- The principal office street address in the home state
- The street and mailing addresses of your registered office in Michigan
- Name and address of a member or manager where the state can send all legal documents
- The nature of the business your LLC will conduct in Michigan
- An authorized signature
Corporation
- Name of the corporation as seen on the Certificate of Good Standing
- An assumed name if the original name is unavailable
- Identification number assigned by the bureau
- Mailing address
- The name of the home state
- The original date of formation
- Total authorized shares of the corporation
- Shares attributed to Michigan
- Year ending apportionment percentage being filed with Michigan
- A return address if it is different from the registered office
- Contact information of the person filing
3. Appoint Registered Agent – Every business needs a registered agent in order to ensure that someone is handling all of the paperwork associated with foreign qualification and business compliance. Most companies will turn to a third party organization like DoMyLLC for this since it simplifies things for them immensely.
4. File The Application – Once you complete the paperwork, file it with the state along with a $50 filing fee for LLCs and $60 for corporations.
5. Ongoing Maintenance – Michigan requires all businesses to file an annual report in order to maintain their compliance. The cost of filing the form is a flat $25. LLCs must complete the process by February 15th of each year while foreign corporations have until May 15th to file.
What Is the Difference Between Foreign Qualification And Incorporating?
Incorporating is a process of forming an entirely new business entity. Foreign qualification doesn’t create a new business. Instead, it simply allows an existing corporation or LLC to foreign qualify and start doing business in another state with no change to its primary operating structure.
How DoMyLLC Can Assist With Streamlining The Process
We understand that there is a lot of work involved in operating a business today. That’s why we take the steps to take the hard work off your shoulder. We do all of the hard work on your business’ Michigan foreign qualification and ensure that you can focus on other aspects of running your business. We offer:
- Name check availability
- Fully filing and registration
- Dedicated account manager for your business
- Ongoing, unlimited customer support
Contact our team today to let us take care of the hard work for you and ensure that you get the results you need without any of the hassle.
Michigan Foreign Qualification FAQs
What Paperwork Is Required?
You must file an Application for a Certificate of Authority to Transact Business in Michigan along with a certificate of existence or a certificate of good standing from the state your business currently exists in.
What Fees Are Needed?
There is a $50 filing fee for LLCs and $60 fee for corporations associated with the process.
Who Can File For Foreign Qualification?
Any business operating in a state outside of Michigan can and should file for foreign qualification.
Do You Need An Attorney For Foreign Qualification?
No attorney is required to foreign qualify. However, it is still a good idea to talk to your lawyer first to ensure that you follow all guidelines and remain compliant.
What Information Is Needed For The Certificate Of Authority?
All basic business information including:
- Name
- State of formation
- Current mailing and physical address
- Names of managers or members
- Registered agent information
What If My Name Is Not Available?
You will have to file a fictitious name and register under that. This has no impact on your name in other states.
Michigan Business Resources
Michigan Office of Secretary of State
Phone:
(517) 241-6470
Address:
Michigan Department of Labor & Economic Growth
PO Box 30054
Lansing, MI 48909
If you’re interested in more info on foreign qualification, call 888-366-9552.