Certificate of Authority Definition

Learn more about what a Certificate of Authority is in business.

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certificate of authority definition

A certificate of authority’s definition is a certificate from a state that allows a foreign business to operate in that state. In this context, “foreign” means another state, not another country. Under a Certificate of Authority’s business definition, a foreign business is a business formed in a state other than the one in which the business now wants to transact business. If your Iowa-formed corporation, for example, wishes to transact business in Wyoming, then the Iowa-formed business is considered a foreign company. The Iowa company will need to apply for a Certificate of Authority in Wyoming to do business in Wyoming.

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Most foreign companies will need to register to do business with the state. In most cases, a foreign limited liability company or corporation will need to apply to that state’s Secretary of State for a Certificate of Authority. To apply for a Certificate of Authority, you will need proof that your business is in good standing in its formation state. You’ll also pay a processing fee.

Certificate of Authority Benefits

The definition of a Certificate of Authority demonstrates its benefit. The Certificate of Authority allows your company to transact business in a state where it wasn’t formed. This allows your business to grow beyond the borders of its home state. If your business doesn’t get a Certificate of Authority to do business in the state, your business can face penalties.

Certificate of Authority Considerations

A Certificate of Authority’s meaning creates several considerations. One of the most important things to consider is that each state has its own process and requirements for applying for a Certificate of Authority. Some states may need very little information about your business. Other states may require gathering a great deal of information about your business’s formation and whether it is up to date on its taxes. Most states require a Certificate of Good Standing from the state where your business was formed as a part of the application. Pay close attention to each state’s requirements. 

Most states will require that your business have a registered agent to get a Certificate of Authority. A registered agent is a person or entity that will accept legal documents on behalf of your business. They need to have a physical address within the state and be available during business hours. We can help you find a local registered agent to fit your needs and the state’s requirements.

Other Names for a Certificate of Authority

Each state may call a Certificate of Authority by another name, although the name “Certificate of Authority” is most common. Some states call a Certificate of Authority a “Foreign Qualification” or a “Foreign Registration Certificate.” Be sure to check with the state’s Secretary of State’s office.

Certificate of Authority Examples

Let’s say you formed a limited liability company in New York. You would now like to transact business in Wyoming. Your business will need to apply to the Wyoming Secretary of State for a Foreign Certificate of Authority to transact business. You will also need to include a Certificate of Good Standing from your company’s state of formation. Once Wyoming issues you a Certificate of Authority, your business will be able to operate in Wyoming.

Summary

A Certificate of Authority allows a foreign (out of state) company to conduct business in that state. Businesses usually apply for a Certificate of Authority from the Secretary of State in the state where they’d like to operate.

We Can Help

We can help you better understand a Certificate of Authority’s definition by using our resources on Foreign Qualification. We also offer services to help you get the Certificate of Authority to transact business within a foreign state, like our Certificate of Good Standing service. Plus, we can also help your business get up and running with our Business Formation services, and it can meet its ongoing compliance requirements with our Worry-Free Compliance service. 

Disclaimer: The content on this page is for informational 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.

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