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.
For example, if your LLC is registered in California and you are looking to open a second location in Nevada, you may need to complete a foreign qualification in Nevada before you can expand there.
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 Nevada. 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 Nevada yields consequences that are far costlier than registering in the first place.
If you fail to foreign qualify, your business will be prohibited from commencing or maintaining a lawsuit in Nevada courts until it has properly registered. In addition, your LLC will be subject to a civil penalty of up to $10,000.
That’s a pretty hefty fine. Combined with the loss of your legal standing in the state, it’s a big hit to your business and not something worth risking. Make sure to foreign qualify as soon as you can to avoid these penalties.
Transacting unauthorized business, however, will not invalidate your current in-state contracts, and it won’t stop you from defending a lawsuit in a Nevada court.
Get more details directly from the state law in NRS 86.548.
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Nevada? The state’s LLC Act is fairly vague on the subject; however, according to other state and tax laws, you are considered to be “doing business” and required to foreign qualify if:
And, of course, no matter which state you expand to, LLC taxes will be there waiting. Every business entity in Nevada is required to pay a Commerce Tax for the privilege of doing business there. By foreign qualifying, you’re letting the state know that you will need to pay this tax. Now, maybe you’re thinking, “I just won’t qualify, so I don’t have to pay,” but be warned: that could lead to much larger penalties down the line. For more information on the Commerce Tax, check out this FAQ page on the 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 Nevada, 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 Nevada. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
See your business activities on this list? You may be exempt from foreign qualification in Nevada. Still, it’s a good idea to read over the more detailed list found in NRS 86.5483 and consult an attorney if you have any questions.
Foreign qualification in Nevada 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 Nevada, you will need to complete and file a few different documents, and you can find all of them together here.
Let’s start with the main one, the “Application for Registration of Foreign LLC” (page 2). This is where you’re going to fill in most of the important LLC-related information, including its official name, registered agent info, records office, and principal office. Page one of the document linked above contains step-by-step instructions for completion.
Your second task is to file an Initial List of Managers or Managing Members (page 3), which includes the names and addresses of each manager/member. If necessary, you can attach an additional 8.5”x11” page with more names.
And there’s more. You will also need to submit a “Certificate of Acceptance of Appointment by Registered Agent” (page 4). This will include a signature of consent from your selected agent.
You’re almost there! As with all Nevada business filings, you’ll need to add a “Customer Order Instructions” (page 5-6), where you have the option to designate one of three expedited service options (24-hour, 2-hour, or 1-hour).
There are three fees associated with this filing. The main form will cost $75, the manager/member list is another $150, and your Business Licence Fee will be $200. You can pay via check or money order made out to the “Secretary of State” or by card (if you also submit the ePayment Checklist from page 8).
Phew. You’re finally ready to submit. You can mail or hand-deliver your documents to:
Secretary of State
202 North Carson Street
Carson City, Nevada 89701-4201
Or, if you’re doing an expedited filing, you can fax it to (775) 684-7138.
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.
You might be wading through a stack of forms, but don’t forget to double-check that your business name meets all of Nevada’s requirements. It must:
You can also reserve your Nevada 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 jurisdiction where you don’t have permission to do so.
You’ll typically need to wait roughly five weeks for Nevada to process a non-expedited foreign qualification application. You can upgrade to 24-hour processing for $125, while two-hour processing is available for $500 and one-hour turnarounds for $1,000. The state provides a handy real-time Processing Dates webpage so you always know what to expect.
Chances are, you’ll require at least one license or permit, in addition to the state’s general business license, to operate your LLC in compliance with Nevada state law. For more information about business licenses and more in this state, check out the Department of Business and Industry’s step-by-step guide to business licensing in Nevada.
Yes. Whether you operate a domestic or foreign LLC in this state, you are required to file a Nevada LLC Annual List and Business License Renewal.
The overall costs of operating a Nevada 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 Nevada 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 Nevada registered agent.
The service then files your Application for Registration with the state to qualify your LLC to do business in Nevada.
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.
Nevada Business Resources
Foreign Qualification by State
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