What is Foreign Qualification?
Foreign qualification is nothing more than the registration process required to transact business in another state or in multiple states. This can involve different things depending on the states – you may need to register your business as a foreign LLC or corporation, similarly to the registration as a business in Alabama. Doing so lets you avoid the creation of a separate business in Alabama. There will be additional requirements throughout the years such as taxes, but the initial registration process is straightforward.
Why Does A Company Need Foreign Qualification?
Why You Need To Do It – If you plan on hiring an employee in another state, opening a new location there, or any other business related dealings there, you’ll need to foreign qualify in that state. Online sales don’t count, but any kind of physical presence in another state will require that you register as a Foreign Corporation or Foreign LLC.
When Should You Do It? – As soon as possible. Once you begin plans to expand your business into Alabama, you should start the ball rolling on foreign qualification. This way you avoid any potential delays or hassles that may arise. Generally, you will need to foreign qualify if your company falls under any of the following criteria:
- Has a physical presence in Alabama
- Buying a property there
- Have remote employees
- Accepts orders in Alabama
- Owns a bank account in Alabama
What Happens If Your Entity Does Not Foreign Qualify?
If you fail to foreign qualify in another state, you could face a variety of penalties including monetary fees, back taxes, interest, and more. You also won’t be able to bring forth a lawsuit in the foreign state until you do foreign qualify. Simply put, qualifying protects your business completely and is something you can’t afford to ignore if you have any kind of presence in another state.
Steps To Obtain Foreign Qualification
There are several basic steps that you’ll have to take in order to foreign qualify your business. These steps include the following.
1. Obtain Certificates – Prior to registering as a Foreign entity in Alabama, the company must first reserve the name with the Secretary of State. The state no longer requires a certified copy of the original articles that were filed in the home state. However, you should submit a Certificate of Good Standing that you will get from your home state.
2. Collect And Submit Information – To ensure the proper registration of your company, you need to submit all necessary information that the state of Alabama requires.
- LLC name registered in your company’s home state
- LLC name reserved in Alabama
- Name of your company’s home state
- The original date of formation
- Date when the LLC will start doing business in Alabama
- Corporation name registered in your company’s home state
- Corporation name reserved in Alabama
- The date you formed the corporation
- Date when the Corporation will begin transacting business in Alabama
- Principal office address
- Certified copy of Articles of Incorporation
3. Appoint Registered Agent – Your registered agent must be named in order to register as well. This individual is responsible for receiving all legal documents from Alabama and is usually a chief officer. You’ll have to submit their name, address, and contact information. To simplify things, most businesses turn to a third party provider such as DoMyLLC to serve as their registered agent.
4. File The Application – With everything gathered, the next step is to fill out and complete your application for Alabama foreign qualification. Include all of the information asked for and submit it along with a filing fee of $150.
5. Ongoing Maintenance – Your registered agent will receive documents at the end of each year that must be filled out and returned along with a renewal fee to keep your business fully compliant and operating legally in Alabama.
What is the Difference Between Foreign Qualification and Incorporating?
Foreign qualification is the process you take when registering your existing corporation or LLC to operate in a state other than the one it is formed. Your home state is where your initial physical place of operation is located, while foreign state is a term used to refer to any other state you do business in. Foreign qualification is required to conduct business outside the state of formation – your home state. Incorporating is the process of registering a brand new business with the Secretary of State.
How DoMyLLC Can Assist With Streamlining The Process
You already have a lot on your plate as a business owner. Making sure that you’re legally able to operate in other states is something that we can help you with. By taking over the filing and registration process for you, we simplify your day. We include:
- A dedicated account manager
- Name availability check
- Full registration for Alabama foreign qualification
- Unlimited customer support
We are here and ready to take your business into the future and eliminate the stress from your shoulders. Contact us today to learn more.
Alabama Foreign Qualification FAQs
Alabama requires that you complete and submit a Certificate of Registration as well as a copy of the name reservation certificate you will receive from the Secretary of State. Additionally, you will need to submit this along with the state filing fee.
The initial cost of filing in Alabama is $150.
Any business that exists in another state that is branching out into Alabama will be able to do so.
You may not need an attorney, but it is always best to seek the counsel of an attorney before you start taking steps to move into other states in order to fully protect yourself.
All primary business information including:
- Official name
- Names of owners
- Type of business it is
Then you will have to choose a fictitious name for your business to operate under while doing business in Alabama if your existing name is already taken.
Alabama Business Resources
Alabama Office of Secretary of State
Alabama Secretary of State
PO Box 5616
Montgomery, AL 36103-5616