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 Florida. 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 Florida yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business:
Let’s add up those penalties. Consider this: you started doing business in Florida in 2015 but didn’t foreign qualify until 2018. For each of those four years (2015, 2016, 2017, and 2018) you could owe $1,000. Then, there are four years of missing annual reports at $138.75 each, plus a $400 late fee each. Tack on the foreign qualification filing fee of $100 and registered agent fee of $25. And your total is (drum roll please): $6,280. That’s a pretty significant penalty, and it doesn’t even include taxes. In the end, it’s simply not worth the risk.
The good news is that if you’re caught doing business without foreign qualifying, it won’t invalidate your current contacts in the state or prevent your LLC from defending a proceeding in Florida court.
Find more information on possible penalties in the Florida Revised LLC Act, Sec. 605.0904.
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Florida? The state’s LLC Act gives little direction on this topic as it applies to foreign LLCs. But the Florida Department of Revenue sheds a little light on the subject. According to the D.O.R., you are considered to be “doing business” in Florida and required to foreign qualify if you:
Depending on have you’ve chosen to set up your LLC, it may also be subject to certain state business taxes. In these cases, foreign qualification lets the state know that you’ll be filing for these. Otherwise, you might be penalized for them later. See this page on the D.O.R. website for more information on Florida’s corporate taxes. 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 Florida, 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 Florida. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
If your only business activities in Florida appear on this list, you’re most likely in the clear. Although, it’s wise to read over the full list of exemptions found in Florida’s LLC Act, Sec. 605.0905, and if you have any questions, seek legal advice.
Foreign qualification in Florida 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 Florida, you will need to file the “Application by Foreign LLC for Authorization to Transact Business in Florida.” While the title lacks brevity, the form itself doesn’t. It only requires the following info:
Additionally, you’ll need to attach a Certificate of Existence from the state in which your LLC was formed. It should be no more than 90 days old. Contact the appropriate state government to request one.
The Department of State doesn’t offer an online submission option for this form, so you’ll need to mail it, along with your Certificate of Existence and cover letter (included on the form), to:
Division of Corporations
P.O. Box 6327
Tallahassee, Florida, 32314
Live near Tallahassee? If you’re out on the town and want to drop your documents off in person, you can do so at:
Division of Corporations
The Centre of Tallahassee
2415 N. Monroe St., Suite 810
Tallahassee, Florida 32303
Don’t forget to pay! Foreign qualification comes with a $125 fee. You can only pay via check, made out to the “Florida Department of State.”
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 on its way to foreign qualification, and you’re embarking on another chapter in the life of your business.
Since each state has its own naming guidelines, it’s important to check before you register your LLC. While some requirements are similar across the board, this isn’t always the case. In Florida, your LLC name must:
Check to see if your name is available by searching for it in the Division of Corporations records. See here for guidelines on name distinguishability.
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 jurisdiction where you don’t have permission to do so.
You’ll typically need to wait roughly two weeks for Florida to process your foreign LLC’s paperwork. Interestingly, this is a bit quicker than the state usually takes to form new domestic LLCs. For up-to-date turnaround time estimates, consult the Department of State’s convenient real-time processing dates page.
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Florida state law. For more information about business licenses in this state, check out the Florida Department of Business and Professional Regulation’s business license search function.
The overall costs of operating a Florida 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 Florida 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 registered agent.
The service then registers your Qualification of Foreign LLC form with the state to qualify your LLC to do business in Florida.
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.
Florida Business Resources
Foreign Qualification by State
Ready to Start Your Florida LLC?