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 Indiana. 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 Indiana yields consequences that are far costlier than registering in the first place.
If you fail to foreign qualify before doing business in Indiana, your LLC will incur severe penalties. It will be prohibited from maintaining an action or proceeding in any Indiana court; plus, it will be liable for a civil penalty of up to $10,000.
That’s pretty steep and frankly not worth the risk. Keep in mind that this $10,000 penalty does not include any other fees or LLC taxes that you may have accrued during your LLC’s time in Indiana.
Transacting business in Indiana without permission, however, will not invalidate any contracts you currently hold, and it won’t prevent you from defending a proceeding in court.
You can go straight to the source and read more about these penalties in Indiana Code Sec. 23-0.5-5-2.
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Indiana? While Indiana law is fairly quiet on the specifics, other state and tax laws shine some light on the subject. Typically, you’re considered to be “doing business” in most states and required to foreign qualify if:
And, of course, you can’t escape taxes. Your LLC may be liable for specific business taxes in Indiana, depending on how you’ve set it up. The state knows how to tax you based on your foreign qualification. Make sure you foreign qualify to avoid larger tax penalties down the line. 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 Indiana, 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 Indiana. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
The Indiana Code has a full, detailed list of these exemptions, and we’d recommend glancing over that as well. If your only business activities in Indiana appear there, you’re probably in the clear regarding foreign qualification. Still, if you’re at all unsure, it’s wise to seek legal counsel.
Foreign qualification in Indiana 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 Indiana, you’ll use the “Foreign Registration Statement.” You have the option to file it online or download a paper copy.
Despite your filing method, you’ll need to include a Certificate of Good Standing (no more than 60 days old) from the state where your LLC was formed. Contact your home state’s government to obtain a copy.
Since filing online submits your form immediately, it’s much quicker and easier than filing by mail. To start, go to the INBiz web portal and click “Login” to create an account. After you do, you’ll see a few options. Click “Secretary of State Business Service Division,” then “Out-of-State Business,” then “Business Formation.” From there, you just need to input your information, pay your $105 fee, and you’ll be on your way.
But if you’d rather fill out a paper form, you’re welcome to do so. Download Form 56369 from the Business Forms page, fill it out with your information, and then mail it to:
Secretary of State
Business Services Division
302 West Washington St., Rm. E018
Indianapolis, IN 46204
Live in Indianapolis? You can also submit your form in person as part of your weekly errands. Just drop it off, with your Certificate of Good Standing and payment, at the same address.
Like most government documents, filing to foreign qualify will cost you a fee. For paper submissions, the fee is $125, payable by check or money order made out to the “Secretary of State.” Online, the fee is $105, and you’ll be able to pay with a credit/debit card as part of the submission process. The INBiz site accepts Visa, Mastercard, American Express, and Discover.
Standard processing time for mailed forms is 5-7 business days and 24 hours for online submissions. So, again, if your goal is expediency, file online!
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.
Like other states, Indiana has its own restrictions for business names. As you complete and file your paperwork, don’t overlook your name’s compliance with state law. Your LLC name must:
You can also reserve your Indiana business name if you’re not quite ready to foreign qualify your LLC. For more information regarding Indiana’s LLC name requirements, see Section 23-0.5-3-1 in the state code.
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 5-7 business days after the date of receipt for Indiana to process a mailed application, while online applications are usually processed within 24 hours.
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Indiana state law. Unfortunately, Indiana doesn’t really have any official online guides to business licensing, so we advise checking with any relevant state agencies, as well as your county and municipal government, regarding any licenses or permits you may require.
The overall costs of operating an Indiana 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 Indiana registered agent.
The service then files your Foreign Registration Statement with the state to qualify your LLC to do business in Indiana.
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.
Indiana Business Resources
Foreign Qualification by State
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