Indiana 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 Indiana, you may need to complete a foreign qualification in Indiana before you can expand there.
What happens if I fail to foreign qualify before doing business in Indiana?
Foreign qualifying is essentially asking permission to do business in the state of Indiana. 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 Indiana yields consequences that are far costlier than registering in the first place.
If you fail to foreign qualify before doing business in Indiana, your LLC will incur severe penalties. It will be prohibited from maintaining an action or proceeding in any Indiana court; plus, it will be liable for a civil penalty of up to $10,000.
That’s pretty steep and frankly not worth the risk. Keep in mind, that $10,000 penalty does not include any other fees or taxes that you may have accrued during your LLC’s time in Indiana.
Transacting business in Indiana without permission, however, will not invalidate any contracts you currently hold, and it won’t prevent you from defending a proceeding in court.
You can go straight to the source and read more about these penalties in Indiana Code Sec. 23-0.5-5-2.
What is considered “doing business” in Indiana?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Indiana? While Indiana law is fairly quiet on the specifics, other state and tax laws shine some light on the subject. Typically, you’re considered to be “doing business” in most states and required to foreign qualify if:
- You have a physical presence, such as offices, warehouses, stores, etc. in the state.
- Agents, salespersons, or other representatives are doing business on behalf of your LLC in the state.
And, of course, you can’t escape taxes. Your LLC may be liable for specific business taxes in Indiana, depending on how you’ve set it up. The state knows how to tax you based on your foreign qualification. Make sure you foreign qualify to avoid larger tax penalties down the line.
If you’re unsure whether or not you need to file for foreign qualification in Indiana, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Indiana?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Indiana. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Maintaining, defending, mediating, arbitrating or settling an action in Indiana court
- Holding meetings, or other activities centered on internal affairs
- Having accounts at financial institutions
- Selling products or services through independent contractors.
- Soliciting or acquiring orders that require acceptance outside the state before turning into contracts
- Securing and collecting debts
- Transacting business in interstate commerce
- Facilitating a single transaction, within 30 days, that isn’t part of a series of similar transactions
- Owning property in Indiana
The Indiana Code has a full, detailed list of these exemptions, and we’d recommend glancing over that as well. If your only business activities in Indiana appear there, you’re probably in the clear regarding foreign qualification. Still, if you’re at all unsure, it’s wise to seek legal counsel.
How to Foreign Qualify your LLC in Indiana
Foreign qualification in Indiana 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 Indiana, find the “Foreign Registration Statement” on the Secretary of State’s Forms page (it’s under “Limited Liability Companies (Foreign)). You have the option to file it online or download a paper copy.
Despite your filing method, you’ll need to include a Certificate of Existence (no more than 60 days old) from the state where your LLC was formed. Contact your home state’s government to obtain a copy.
Since filing online submits your form immediately, it’s much quicker and easier than filing by mail. To start, go to the INBiz web portal and click “Login” to create an account. After you do, you’ll see a few options. Click “Secretary of State Business Service Division,” then “Out-of-State Business,” then “Business Formation.” From there, you just need to input your information, pay your $105 fee, and you’ll be on your way.
But if you’d rather fill out a paper form, you’re welcome to do so. Download Form 56369 from the Business Forms page, fill it out with your information, and then mail it to:
Secretary of State
Business Services Division
302 West Washington St., Rm. E018
Indianapolis, IN 46204
Live in Indianapolis? You can also submit your form in person as part of your weekly errands. Just drop it off, with your Certificate of Existence and payment, at the same address.
Like most government documents, filing to foreign qualify will cost you a fee. For paper submissions, the fee is $125, payable by check or money order made out to “Secretary of State.” Online, the fee is $105, and you’ll be able to pay with a credit/debit card as part of the submission process. The INBiz site accepts Visa, Mastercard, American Express, and Discover.
Standard processing time for mailed forms is 5-7 business days, and 24 hours for online submissions. So, again, if your goal is expediency, file online!
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
Like other states, Indiana has its own restrictions for business names. As you complete and file your paperwork, don’t overlook your name’s compliance with state law. Your LLC name must:
- Use a term that indicates its business type, like “limited liability company,” “L.L.C.,” or “LLC”
- Be distinguishable and available among all other businesses registered with the Secretary of State. To check your name’s availability, use the S.O.S. Business Search.
For more information regarding Indiana’s LLC name requirements, see Section 23-0.5-3-1 in the state code.
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 Indiana 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 Indiana. For a $100 service fee, they’ll handle that paperwork so you don’t have to.