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.
For example, if your LLC is registered in Washington and you are looking to open a second location in Mississippi, you may need to complete a foreign qualification in Mississippi before you can expand there.
Important Note: If you’d like to save time and have the foreign qualification paperwork taken care of for you, many of the best LLC services can handle this task for you.
What happens if I fail to foreign qualify before doing business in Mississippi?
Foreign qualifying is essentially asking permission to do business in the state of Mississippi. 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 Mississippi yields consequences that are far costlier than registering in the first place.
If you fail to foreign qualify, your business will be prohibited from enacting or maintaining an action or proceeding in Mississippi court. Plus, the Attorney General may cut you off from doing business in the state and assign the Secretary of State as your registered agent.
The prospect of losing your LLC’s income and legal footing isn’t a particularly encouraging one, so it’s best to foreign qualify as soon as you begin doing business. Despite these penalties, your existing contracts in Mississippi would still be considered valid, and you would still be able to defend a proceeding or lawsuit in court.
The Mississippi LLC Act, Section § 79-29-1013 provides further insight into potential penalties.
What is considered “doing business” in Mississippi?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Mississippi? The state’s LLC Act doesn’t give specifics on what this phrase means, but other state and tax laws tell us that you are considered to be “doing business” in most states and required to foreign qualify if:
- Your LLC operates offices, warehouses, or stores, or has another physical presence in the state.
- Your LLC has salespeople, agents, or representatives doing business on its behalf in the state.
Then there are LLC taxes. While LLCs are typically pass-through entities, depending on how you’ve structured your business, you might need to pay certain corporate taxes. By foreign qualifying in Mississippi, you’re notifying the state of your tax status. If they don’t know to apply any particular taxes, you may end up with more severe fines in the future. For additional information on Mississippi taxes, visit the Department of Revenue 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 Mississippi, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Mississippi?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Mississippi. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Maintaining, defending, or settling a lawsuit in a Mississippi court
- Holding LLC member and/or manager meetings, or other activities solely concerning internal affairs
- Maintaining bank accounts
- Holding offices/agencies for the transfer and/or exchange of the LLC’s own securities
- Selling products or services through independent contractors
- Collecting debts, or creating and/or acquiring indebtedness
- Owning real or personal property in Mississippi
- A single transaction – isolated from other business activity – taking place within 30 days
- Transacting business in interstate commerce
Do your business activities in Mississippi appear on this list? Are they the only business activities you execute there? Then you’re most likely off the hook with foreign qualification. However, it’s a good idea to glance over the full list in the state’s LLC Act and seek legal advice if you’re unsure.
How to Foreign Qualify Your LLC in Mississippi
Foreign qualification in Mississippi 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 Mississippi, you will need to do so online, as the Secretary of State no longer accepts paper documents. Here’s how.
- Go to the online filing system
- Log in or create an account
- Under the “Name Reservation and Formation Filings” section, select the option to register an out-of-state business
- Follow the on-screen prompts to enter your business information
- Choose your payment option (see below)
At the end of your online form, you will see a screen that asks you to select a payment method for the $250 fee. You can either pay online with a credit/debit card, or you can print out your document and mail it, with a check, to:
Mississippi Secretary of State
P.O. Box 136
Jackson, MS 39205-0136
One more thing: you’ll also need to submit a Certificate of Good Standing from the state where your LLC was formed, dated within 60 days of your filing. Contact your home state’s government to obtain one.
Since the whole process is electronic, the processing time is fairly quick, typically 24 hours, so your LLC should be registered in Mississippi soon!
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 you hit send on that application, double-check to make sure that your LLC name follows Mississippi’s business naming requirements. You wouldn’t want your name to cause a hitch in the foreign qualification process. As a reminder, your LLC name must:
- Contain the words “limited liability company,” or the abbreviations “L.L.C.” or “LLC”
- Not use any of the following: “bank,” “banker,” “bankers,” “banking,” “trust company,” “insurance,” “trust,” “corporation,” “incorporated,” “partnership,” or “limited partnership” without permission
- Be completely distinguishable from all other names on record with the Mississippi Secretary of State (perform a Mississippi LLC name search to make sure the name you want is available)
You can also reserve your Mississippi business name if you’re not quite ready to foreign qualify your LLC.
Should I hire a service to file my Mississippi 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 Mississippi 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 Mississippi 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 Mississippi foreign LLC professionally registered, go with an online business service provider. There are plenty of reputable companies that can help you out with Mississippi 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 Mississippi to Process a Foreign Qualification?
You’ll typically need to wait roughly 24 hours for the state to process your document filing. Thanks to its online-only format, Mississippi has some of the nation’s fastest turnaround times.
Where Can I Learn More About the Mississippi LLC Licensing and Permitting Requirements?
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Mississippi state law. Unfortunately, unlike most states, Mississippi does not have a convenient centralized license information webpage. You’ll need to contact any relevant state regulatory agencies and county/municipal government resources to find out if you need to get any licenses or permits for your Mississippi LLC.
Do I Need to File an Annual Report for My Foreign LLC in Mississippi?
Yes. Whether you operate a domestic or foreign LLC in this state, you are required to file a Mississippi LLC Annual Report.
What Is the Total Expected Cost of Operating an LLC in Mississippi?
The overall costs of operating a Mississippi 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 Mississippi registered agent.
The service then files your registration with the state to qualify your LLC to do business in Mississippi.
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 Mississippi 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.