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.
What happens if I fail to foreign qualify before doing business in Idaho?
Foreign qualifying is essentially asking permission to do business in the state of Idaho. 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 Idaho yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business:
- Will be prohibited from maintaining any action or proceeding in an Idaho court
- Can be stopped by the attorney general from doing business in the state until properly registered
In short, if caught doing business in Idaho without foreign qualifying, you could be cut off from your income stream and legal support there. However, failing to foreign qualify will not negate any existing contracts your LLC has in Idaho, nor will it keep you from defending an action or proceeding in Idaho courts.
To read the laws behind these penalties, check out Idaho Statutes, Sec. 30-21-502.
What is considered “doing business” in Idaho?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Idaho? State law gives little guidance on what specifically constitutes “doing business,” but we know from other state and tax laws that an LLC is typically considered to be “doing business” and required to foreign qualify if:
- It has offices, warehouses, stores, or other physical presences in the state
- There are salespersons, agents, or representatives operating in the state on its behalf
And we can’t forget about taxes either. Depending on how you’ve structured your LLC, you may be liable for specific business taxes in Idaho. Foreign qualifying informs the state that you’ll potentially be eligible for taxation. Otherwise, you may be charged additional penalties down the road. There’s plenty more tax information on the Idaho State Tax Commission 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 Idaho, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Idaho?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Idaho. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Maintaining, defending, or settling an action or proceeding in Idaho court
- Facilitating activities concerning internal affairs, like LLC member or manager meetings
- Having accounts at financial institutions
- Maintaining offices/agencies for the transfer or exchange of the LLC’s own securities
- Selling via independent contractors
- Soliciting and securing orders to be fulfilled outside the state before becoming contracts
- Securing and collecting indebtedness, or collecting debts
- Transacting business in interstate commerce
- Conducting a single transaction that is not in a series of similar transactions
- Owning, without more, property in Idaho
Find a more detailed list in the Idaho Statutes, Sec. 30-21-505. Examine the exemptions and, if you find your sole Idaho business activities present, you’re probably off the hook and won’t need to foreign qualify. Still, if you’re even a little unsure, it’s best to seek legal counsel.
How to Foreign Qualify Your LLC in Idaho
Foreign qualification in Idaho 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 Idaho, you’ll need to file a Foreign Registration Statement. Additionally, you will be required to supply a Certificate of Existence (or Certificate of Good Standing), not more than 90 days old, from the state in which your LLC was formed. To get one of these forms, contact the Secretary of State’s office in the state where you formed your domestic LLC.
If speed is what you’re after, you’ll want to file online through the Idaho SOSBiz website. First, create an account. Then click “Forms” on the left side of the page. In the “Foreign Entity Registration” section, choose the form for a Limited Liability Company. Follow the instructions to complete and submit your form.
But if you like doing business by postal mail, go for it. A paper form is available for download and completion here. The second page contains step-by-step instructions on how to fill it out. When finished, mail or hand-deliver your form, along with your Certificate of Existence (or Good Standing) to:
Office of the Secretary of State
450 N 4th St.
P.O. Box 83720
Boise, Idaho 83720-0080
Foreign qualification requires a standard $100 fee both online and on paper. If you’ve handwritten your paper form, the fee is $120 instead. The online form will prompt you to pay via credit card. For mailed or in-person filings, include a check made out to “Idaho Secretary of State.” The typical processing time for this form is 7-10 days. For expedited processing of your paper form, you can pay an additional $40 fee for eight-hour service, while same-day service is available for an extra $100.
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
Expanding your LLC to a new state is exciting stuff. But in that excitement, don’t forget to confirm your business name’s compliance with Idaho naming requirements. You don’t want your registration held up because of a name discrepancy! As a reminder, your LLC name must:
- Contain the words “limited liability company,” or “limited company,” or one of the abbreviations: L.L.C., LLC, L.C., or LC.
- Be distinguishable and available in the Idaho Secretary of State records. Check your name availability using the SOSBiz Business Search tool.
- Perform an Idaho LLC name search to make sure the name you want is available.
- You can also reserve your Idaho business name if you’re not quite ready to foreign qualify your LLC.
Should I hire a service to file my Idaho foreign LLC?
Considering all the work that goes into expanding your business to a new state, you’ve likely got a lot on your plate. Rather than trying to juggle everything yourself, you can bring on an individual or company to help you secure your LLC’s Idaho foreign qualification.
For example, business attorneys understand all the legal nuances involved, providing peace of mind that the job will get done correctly. But if you go this route, be sure you have the budget for it. Lawyer fees for Idaho foreign LLC qualifications can be a prohibitively expensive option for businesses operating on tight budgets.
If you’re operating on a limited budget, but still want to have your Idaho foreign LLC professionally registered, go with an online business service provider. There are plenty of reputable companies that can help you out with Idaho foreign qualifications, but here are a couple of our favorites:
- MyCompanyWorks ($99): MyCompanyWorks is one of the only service providers offering foreign qualifications for less than $100. This company receives excellent customer reviews and has a great track record of success, making it a smart choice for a wide range of entrepreneurs.
- IncFile ($149): IncFile offers a free LLC formation service that we have always appreciated, and its pricing for foreign qualifications is a reasonable $149. IncFile has the best customer feedback reputation in the industry, with tens of thousands of positive reviews available online.
- Northwest Registered Agent ($225): Northwest is more of a premium service, with the best customer support in the industry, in our opinion. They also include a year of their namesake registered agent service with every foreign qualification. There’s a reason Northwest is our #1 pick among the best registered agent services!
Frequently Asked Questions
When Is the Best Time to Foreign Qualify an 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 state where you don’t have permission to do so.
How Long Does It Take Idaho to Process a Foreign Qualification?
You’ll typically need to wait roughly 7-10 days for Idaho to process your foreign LLC filing. If you expedite your order, that turnaround time is cut all the way to just eight hours (for an extra $40), while an additional $100 secures one-hour processing.
Where Can I Learn More About the Idaho LLC Licensing and Permitting Requirements?
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Idaho state law. For more information about business licenses in this state, check out the state’s “Licenses, Permits and Regulations” webpage.
Do I Need to File an Annual Report for My Foreign LLC in Idaho?
Yes. Whether you operate a domestic or foreign LLC in this state, you are required to file an Idaho LLC annual report.
What Is the Total Expected Cost of Operating an LLC in Idaho?
The overall costs of operating an Idaho 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.
Should I Use an LLC Service, Hire an Attorney, or Foreign Qualify My Own LLC?
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.
How Do Online LLC Services Work?
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 Idaho registered agent.
The service then registers your Foreign Registration Statement with the state to qualify your LLC to do business in Idaho.
Are LLC Service Websites Legit?
Absolutely. There are quite a few reputable companies offering LLC formation service and foreign qualifications these days, including the two options we discussed earlier: MyCompanyWorks and IncFile.
In fact, while we certainly have our opinions about which ones offer the best pricing and features, every one of the incorporation services we discuss on this website is entirely legitimate and trustworthy.
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 Idaho 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.