Your business is growing, and you’re planning an expansion to other states. It’s a good problem to have!
But it’s not quite as simple as choosing another location. Because each state has different rules and requirements for business operations, you may need a “foreign qualification” in each state where you plan to do business.
It’s a common misconception that foreign qualification is only for businesses operating outside the U.S. But in this case, “foreign” refers to any business operating in a state that isn’t the state where the LLC was originally formed.
Important Note: If you’d like to save time and have the foreign qualification paperwork taken care of for you, many of the best LLC services can handle this task for you.
Foreign qualifying is essentially asking permission to do business in the state of Arizona. And the notion that “it’s easier to ask forgiveness than permission” doesn’t apply here. Failing to foreign qualify before starting a business in Arizona yields consequences that are far costlier than registering in the first place.
If you fail to foreign qualify, your business will no longer be allowed to maintain an action, lawsuit, or proceeding in an Arizona court. Not only that, but if you’re caught operating in Arizona while unregistered, the attorney general can stop you from doing business altogether. All things considered, it’s simply not worth the risk.
Find more detail about the possible penalties in the Arizona Revised Statutes § 29-809.
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Arizona? Unfortunately, Arizona state law doesn’t give specific guidelines on this. However, you are considered to be “doing business” in most states and required to foreign qualify if:
Foreign qualification plays a role in LLC taxes too. Most businesses operating in Arizona are required to pay a Transaction Privilege Tax, which is a tax for the privilege of doing business in the state. When you foreign qualify your business, it notifies the state that you will be filing taxes as an LLC there. Learn more about the Transaction Privilege Tax on Arizona’s Department of Revenue website. It’s important to always stay on top of your LLC’s taxation requirements to avoid any unwelcome surprises.
If you’re unsure whether or not you need to file for a foreign qualification in Arizona, we suggest seeking legal counsel.
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Arizona. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
See anything your LLC does in Arizona? A few things? If those are your only business actions in the state, you’re likely exempt from foreign qualifying. Still, it’s usually wise to seek legal counsel, just to be sure.
For more information on these exemptions, refer back to the Arizona Revised Statutes § 29-809.
Foreign qualification in Arizona is simple if you know where to find and send your forms. If you or your legal counsel has decided to foreign qualify your LLC in Arizona, your task is to file a Foreign Registration Statement, along with any other accompanying documents. The Arizona Corporation Commission website offers detailed instructions on how to file this form, and you can find them here.
Unfortunately, there’s no online submission option for this application. Your options are to submit it by mail or in person. Either way, you’ll need to download it from the A.C.C. forms page.
After completing your form, don’t send it just yet! To successfully process your application, the state will also need:
You’ve gathered all your documents, but don’t forget the fee. Foreign qualification in Arizona costs $150. If you’re wondering how long it will take, the A.C.C. updates processing times on their eCorp page weekly. Just click “Processing Times” at the bottom of the page. You can always expedite the process by paying an additional $35.
Whether filing by mail or in person, submit your application to:
Arizona Corporation Commission
1300 W. Washington St.
Phoenix, Arizona 85007
By mail, the state will only accept checks or money orders. In-person, you can pay via check, cash, money order, or credit card.
After your form is in and your fee is paid, sit back, take a deep breath, and pat yourself on the back. Your LLC is foreign qualified and you’re embarking on another chapter in the life of your business.
In all the excitement of expanding your business to a new state, be sure that you follow Arizona’s business name requirements. Your LLC must:
You can also reserve your Arizona business name if you’re not quite ready to foreign qualify your LLC.
We think you should foreign qualify your LLC before you begin conducting business in a new state. If you don’t, your business could be subject to a broad range of fines and penalties for operating an LLC in a state where you don’t have permission to do so.
Arizona updates its turnaround times in real time on this page. At the time of this writing, standard processing was taking roughly 13-15 business days, while expedited processing sped that up to 3-5 business days.
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Arizona state law. For more information about business licenses and more in this state, check out the Licensing and Taxes section on the Arizona Department of Revenue’s Business page.
The overall costs of operating an Arizona LLC can vary considerably based on the specifics of your business. However, we created a helpful guide to help you identify and plan for every expense your LLC will face in this state.
The answer to this question lies in your personal preferences, but we can give some general pointers. An attorney will cost the most by a mile, but also provides expertise you won’t find with the other options. The DIY route is free of charge but can require quite a bit of legwork and provides no peace of mind that the process is being completed correctly.
Using an LLC service means your business will be foreign qualified by professionals who know what they’re doing, while also costing significantly less than a lawyer. This “best of both worlds” attribute is what makes LLC services our preferred option.
Using an online LLC service removes much of the hassle from the foreign qualification process. With these services, all you need to do is provide them with the name, location, and industry your business operates in, along with some info about yourself and your Arizona statutory agent.
The service then registers your Foreign Registration Statement with the state to qualify your LLC to do business in Arizona.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Arizona Business Resources
Foreign Qualification by State
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