Georgia LLC Foreign Qualification: Here’s What to do
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 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 Washington and you are looking to open a second location in Georgia, you may need to complete a foreign qualification in Georgia before you can expand there.
What happens if I fail to foreign qualify before doing business in Georgia?
Foreign qualifying is essentially asking permission to do business in the state of Georgia. 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 Georgia yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business:
- Will be banned from maintaining an action, suit, or proceeding in a Georgia court
- Can be stopped from doing business in the state by the attorney general
- Will be liable for all fees that would have been imposed (had it registered) during the time it’s been transacting business in Georgia
- Will owe the state an additional $500 penalty unless you foreign qualify within 30 days of your first business transaction in Georgia
Transacting business without foreign qualifying will not, however, invalidate any of your existing contracts. It also will not prevent your LLC from defending an action, suit, or proceeding in Georgia courts.
Read it straight from the source in Georgia Code, Sec. 14-11-711.
What is considered “doing business” in Georgia?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Georgia? Georgia law doesn’t provide many specifics, but we know from other state and tax laws that generally, you are considered to be “doing business” and required to foreign qualify if:
- You maintain a physical presence in the state. This can mean anything from offices to stores to warehouses or other buildings.
- Salespersons, agents, or representatives are operating on behalf of your LLC in the state.
Another important function of foreign qualification is tax notification. Depending on how your LLC is set up, you may owe annual business income taxes, and foreign qualifying lets Georgia know you’ll be paying them. If you don’t foreign qualify, you won’t be charged these taxes and it could lead to larger penalties down the road.
If you’re unsure whether or not you need to file for foreign qualification in Georgia, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Georgia?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Georgia. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Defending or maintaining any action or proceeding in a Georgia court
- Holding meetings of members, managers, owners, shareholders, etc.
- Having bank accounts in the state
- Using independent contractors to sell products or services
- Soliciting or procuring orders outside the state before they become contracts
- Creating, acquiring, collecting, or securing debts
- Owning, without more, real or personal property in the state
- Transacting business in interstate or foreign commerce
- Coordinating a single transaction, not in a series of similar transactions
- Serving as a trustee, executor, administrator, or guardian
- Owning or controlling a subsidiary transacting business in the state
For a more detailed list, see Georgia Code Sec. 14-11-702. You may not have to foreign qualify in Georgia if your LLC’s only business activities appear on the list. But while thorough, this list isn’t exhaustive, so if you’re even a little unsure, it’s best to seek legal counsel.
How to Foreign Qualify your LLC in Georgia
Foreign qualification in Georgia 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 Georgia, you have a couple of options. First, you can file online, which is the more streamlined route. Go to the Secretary of State’s eCorp system and click “Online Services.” Input your information to create an account, and you’re on your way.
The second option is to file by mail. On the S.O.S. “Create or Register a New Entity” page, you’ll find the “Application for Certificate of Authority for Foreign LLC” document. Complete the form with all the necessary information, then mail it to:
Office of Secretary of State
2 Martin Luther King Jr. Dr. SE
Suite 313 West Tower
Atlanta, Georgia 30334
Live in Atlanta? Want to personally watch a government employee accept your form? You can also hand deliver it to the same address.
All three filing methods require a $225 fee. Filing online, you will be prompted to pay using a credit or debit card. By mail or in person, include a check payable to “Secretary of State.” All filing fees are non-refundable.
The Georgia Secretary of State’s office processes most documents within 5-7 days of receipt. If you’re in a hurry, they offer three different expedited processing options:
- 2-Day Service: $100
- Same Day Service: $250
- One Hour Service: $1,000
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.
Name Requirements to Remember
Before registering your LLC true or alternate name, it’s a good idea to review the state’s business name requirements. As a reminder, your LLC name:
- Must contain a term that signifies its business type, like “limited liability company,” “L.L.C.,” or “LLC”
- Cannot use any of the following terms without written consent from the Office of Insurance and Safety Fire Commissioner: “insurance,” “assurance,” “surety,” “fidelity,” “reinsurance,” “reassurance,” or “indemnity”
- Cannot use any of the following terms without written consent from the Department of Banking and Finance: “bank,” “banc,” “banque,” “banker,” “banking company,” “banking house,” “bancorp,” “bankruptcy,” “credit union,” “savings & loan,” “trust,” or “trust company”
- Cannot use any of the following terms without written consent from the Georgia Nonpublic Postsecondary Education Commission: “college” or “university”
Need to save time?
Let’s face it, there’s never enough time in the day, especially when you’re running a company. And properly registering your LLC in Georgia involves research and time, time that you could be using to continue growing your business.
If the thought of paperwork, fees and state correspondence makes your head spin, consider using a service like Northwest Registered Agent to foreign qualify your business. Services like Northwest ensure that your forms are filed correctly and on-time, potentially saving you thousands of dollars in penalties, not to mention a bunch of time and stress.
And as a bonus, they include a free registered agent service for one year to keep your business compliant and in good standing with the state of Georgia. For a $100 service fee, they’ll handle that paperwork so you don’t have to.