advantages to s corporations

QUALIFYING TO DO BUSINESS


 

"Qualifying to do business" means securing approval to do business in a state (or states) other than the state of formation. A company is a "domestic" company in its state of formation, and a "foreign corporation" (or "foreign limited liability company") in all other states. The significant question is the meaning of the words "do business."

Bear in mind that it is not the state where you live which determines whether or not your company is a foreign or domestic company. Instead, it is the state where you form the company. This leads to the possibility that if you form a company in a state other than your state of residence (for example, Delaware), you may have to qualify that company as a foreign company in the state where you live and do business

"Qualifying to do business" in another state is normally as costly as the original incorporation or formation, so that you end up with roughly double the cost if you incorporate (or form a limited liability company) in a state other than the state where you live and do business.

We cannot cover the question of precisely what the term "do business" means. If you go to Arkansas to try to interest WalMart in your product and then return home, you have not (by that act alone) done business in Arkansas. On the other hand, if you are WalMart and you have stores in Illinois, you are doing business in Illinois.

If it is necessary for you to qualify to do business in a foreign state, we will be happy to assist you and you can order online.

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