Louisiana 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 Louisiana, you may need to complete a foreign qualification in Louisiana before you can expand there.
What happens if I fail to foreign qualify before doing business in Louisiana?
Foreign qualifying is essentially asking permission to do business in the state of Louisiana. 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 Louisiana yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business:
- Will be banned from presenting any judicial request in a Louisiana court
- Will be liable for all fees and taxes it would have paid during its time in Louisiana had it been properly registered. This includes any late fees that apply.
Those fees can really add up, especially the late fees, and going without any legal footing in the state can be dangerous. So, it’s best not to mess around and foreign qualify as soon as you begin transacting business in Louisiana.
If caught doing unauthorized business, you will still retain some of your rights within the state. Your contracts will still be valid, and you’ll still be allowed to defend an action or proceeding in Louisiana court.
Louisiana State Legislature RS 12:1354 has all the details if you need more information.
What is considered “doing business” in Louisiana?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Louisiana? The state’s laws are fairly quiet on the specifics. However, we know from other state and tax laws that you are considered to be “doing business” in most states and required to foreign qualify if:
- Your LLC owns and/or runs offices, warehouses, stores or have any other type of physical presence within the state.
- Your LLC has salespeople, agents, or other representatives conducting business on its behalf in the state.
Louisiana also has a franchise tax for corporations and other qualifying businesses. If your LLC is organized and taxed like a corporation, it will be subject to this and other taxes. By foreign qualifying, you’re also letting the state know so they can apply the necessary taxes. If you don’t end up paying these taxes, you’ll likely run into some pretty severe penalties down the road. Learn more about possible business taxes on the Louisiana Department of Revenue site.
If you’re unsure whether or not you need to file for foreign qualification in Louisiana, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Louisiana?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Louisiana. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Maintaining or defending an action or lawsuit in Louisiana court
- Any activities solely related to internal affairs, like meetings of managers or shareholders
- Having a business bank account in the state
- Having offices for the transfer or exchange of the LLC’s own securities
- Soliciting and/or procuring orders that are completed outside the state before becoming contracts
- Creating debt, mortgages, or liens
- Transacting business in interstate or foreign commerce
- A single isolated transaction, taking place within 30 days, not in line with other business transactions
- Acquiring or disposing or property (not part of regular business activity)
Louisiana state law has more information on these exemptions (RS 12:302). After reviewing the full list, if you find your only Louisiana business activities present, congratulations! You’re likely exempt from foreign qualifying. However, considering the penalties involved, it’s best to seek legal counsel if you’re at all unsure.
How to Foreign Qualify your LLC in Louisiana
Foreign qualification in Louisiana 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 Louisiana, you’ll need to file an “Application for Authority to Transact Business in Louisiana” either in paper or online.
The first step in any Louisiana LLC formation is applying for a name reservation. Check out our guide on how to reserve an LLC name in the state.
To finish the foreign qualification process as quickly as possible, you’re better off filing online. Take a digital stroll over to the geauxBIZ portal to get started. Once you sign in to your account, you’ll need to find the correct form. Fortunately, the site can help you out. This video walkthrough will give you the information you need to complete the form.
If you’d like to avoid the online system, trusty postal mail is also an option. Download and complete the “Application for Authority” form, then mail it to:
Secretary of State Commercial Division
- O. Box 94125
Baton Rouge, LA 70804-9125
Live near Baton Rouge? You can drop it off in person instead. Just go to:
8585 Archives Ave.
Baton Rouge, Louisiana 70809
But don’t send the form by itself! Louisiana also requires a Certificate of Existence (or Good Standing) from the state where the LLC was formed. Contact your home state government to obtain one.
All filing methods cost a $150 fee. Be sure to include a check, made payable to “Secretary of State,” with all mailed or hand-delivered forms. For online filings, you’ll be prompted to input your credit/debit card information as part of the online form.
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
When applying for your required name reservation, remember to follow Louisiana’s LLC name guidelines. State law dictates that your LLC name must:
- Use the words “limited liability company,” the abbreviation “L.L.C.,” or the abbreviation “L.C.”
- Not contain terms that would be misleading as to the LLC’s purpose
- Not use terms that indicate government affiliation
- Not contain words/phrases that “comprise immoral, deceptive, or scandalous matter”
- Be available and distinguishable on the Secretary of State records.
Find a more detailed list of requirements here.
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 Louisiana 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 Louisiana. For a $100 service fee, they’ll handle that paperwork so you don’t have to.