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 Ohio and you are looking to open a second location in Pennsylvania, you may need to complete a foreign qualification in Pennsylvania 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 Pennsylvania. 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 Pennsylvania 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 any lawsuits in Pennsylvania courts. However, it won’t invalidate your current contracts, nor will it prevent you from defending any in-state lawsuit. Further, a single member or manager of your LLC cannot be held responsible for your company’s debts or other liabilities just because you conducted unauthorized business in the state.
For more on these penalties and other foreign LLC requirements, take a look at the Pennsylvania General Assembly, Title 15.
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Pennsylvania? Unfortunately, there isn’t a clear answer in the state laws, which can potentially lead to some confusion. However, tax laws tell us that you are considered to be “doing business” in most states and required to foreign qualify if:
Generally, if your LLC makes a profit off of Pennsylvania’s economy, you’re doing business there.
If you’re unsure whether or not you need to file for a foreign qualification in Pennsylvania, 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 Pennsylvania. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
While this list is fairly comprehensive, the Pennsylvania General Assembly has one that offers more detail in Title 15 § 403. See all of your Pennsylvania business activities here? Nice! You’re likely off the hook with foreign qualification. But you should still speak with an attorney if you have any hesitations.
Foreign qualification in Pennsylvania 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 Pennsylvania, you need to file a “Foreign Registration Statement” by mail or online.
Online filing is the quickest way to get your business registered. To get started, go to PENN File, Pennsylvania’s online filing portal. You’ll need to create an account before doing anything else. After doing so, find the form for foreign registration and follow the instructions to input your information.
Your second option is postal mail. For this method, download the “Foreign Registration Statement” from the Department of State’s Registration Forms page. The form itself has in-depth instructions for its completion on pages 3-5. To comply with D.O.S. standards, fill it out electronically using a PDF filler like Adobe Acrobat or – if you want to write by hand – using blue or blue-black ink. When you’ve completed the form, send it to:
Pennsylvania Department of State
Bureau of Corporations and Charitable Organizations
P.O. Box 8722
Harrisburg, PA 17105-8722
But don’t send it just yet! Along with your finished form, you will need to include two more items:
The typical processing time is 15 business days, plus mailing time. But if you’re in a hurry, you have three expedited service options: same-day for $100, three-hour for $300, and one-hour for $1,000. To request one of these options, include an “Expedited Service Request Form” with your other documents.
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.
One more detail to keep in mind. Pennsylvania has its own requirements for business entity names. To avoid delays in your registration process because of name noncompliance, check to confirm that your business name follows all the rules.
Your LLC name must use the terms “company,” “limited,” or “limited liability company,” or an abbreviation of one of those terms. Plus, it must be available in the Department of State records and distinguishable from all other registered and reserved business entity names. Perform a Pennsylvania LLC name search to make sure the name you want is available.
You can also reserve your Pennsylvania 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 15 business days for Pennsylvania to process a non-expedited application. That said, there are expedited services available, starting at an extra $100 for same-day service. If you’re really in a hurry, you can even drop an extra $1,000 and the state will process your foreign qualification within just one hour.
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Pennsylvania state law. For more information about business licenses and more in this state, check out Pennsylvania’s convenient Licensing Services webpage.
Yes. Whether you operate a domestic or foreign LLC in this state, you are required to file a Pennsylvania LLC Decennial Report.
The overall costs of operating a Pennsylvania 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 Pennsylvania registered office.
The service then files your Foreign Registration Statement with the state to qualify your LLC to do business in Pennsylvania.
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.
Pennsylvania Business Resources
Foreign Qualification by State
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