Idaho 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 Idaho, you may need to complete a foreign qualification in Idaho before you can expand there.
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.
If you’re unsure whether or not you need to file for 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 board 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 your home state’s government.
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, send your form, along with your Certificate of Existence (or Good Standing) to:
Office of the Secretary of State
P.O. Box 83720
Boise, Idaho 83720-0080
Or, if you’re local to Boise and want to bring the documents in yourself, you can drop them off at:
450 N 4th St.
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.” Typically processing time for this form is 2-3 weeks. For expedited processing of your paper form, you can pay an additional $20 fee.
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.
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.
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 Idaho. For a $100 service fee, they’ll handle that paperwork so you don’t have to.