What Is A Foreign LLC?
When people hear the word “foreign,” they sometimes think of something new or unfamiliar. Regarding this statement, operating a company to a different state after being formed in their home state is considered foreign. It is not entirely relocating the company to another location, but only within the United States’ borders.
More so, a foreign LLC is a Limited Liability Company established in one state and then expanded its reach to another state in a more specific sense. It allows physical location and new retailing opportunities for the business and its members.
Further, this short article will also provide additional information about the foreign LLC. Hopefully, it will help entrepreneurs to have a better understanding of this particular business structure.
Know the qualifications to register a foreign LLC.
The Secretary of State in various locations across the United States has a more detailed explanation of the registration process on their websites.
For this section, the following are several requirements that entrepreneurs must have to pursue foreign LLC:
- The business owned offices in another state
- Have retail stores in another place
- Owned storage facilities in another state.
- Employ a sales representative in another state
Reason to consider forming a foreign LLC.
In a practical sense, having a branch office will help the business deliver the goods immediately to customers rather than shipping them from the home state to another location.
For example, the company was founded in California, but the company must have a warehouse in Delaware, United States, due to client demands. This specific circumstance will require the formation of a foreign LLC.
Know the cost beforehand.
The formation cost of a Limited Liability Company will vary depending on the state. Entrepreneurs can check the website of the Secretary of State for more detailed information regarding the matter.
For a clear example, the Delaware LLC cost for the formation ranges from $90 to $150, but registering a foreign LLC is $200. Filing can be done online or by mail.
Learn more about certain exemptions.
The state of Delaware has a list of conditions that will not require you to register as a foreign LLC even if you have transactions in the state. It will be helpful for entrepreneurs to check it out and see if it applies to them.
The following are the exemptions that will not require to register as a Foreign LLC in Delaware:
- Defending or settling a legal action
- Using independent contractors to sell
- Transacting in interstate commerce
- Collecting debts or foreclosing on mortgages or other property security interests
- Host meetings personally with executives, investors, and clients
- Handling the company’s shares through a state-based office, corporation, or individuals
- As an insurance company doing business
In conclusion, take into account all of the information presented above. Understand the concept of foreign LLC by simply admitting to going to another state to operate and start having a physical presence such as a warehouse to improve the shipment of goods to clients.