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 Missouri, you may need to complete a foreign qualification in Missouri before you can expand there.
What happens if I fail to foreign qualify before doing business in Missouri?
Foreign qualifying is essentially asking permission to do business in the state of Missouri. 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 Missouri yields consequences that are far costlier than registering in the first place.
If you fail to foreign qualify, your business will not be allowed to commence or maintain a lawsuit in Missouri courts. In addition, your LLC will be subject to a fine of up to $1,000 and the Attorney General may stop you from doing business in the state.
Even so, transacting business in the state without authorization won’t completely inhibit your activities there. For example, it won’t invalidate your existing contracts or prevent you from defending a lawsuit.
See what the Missouri LLC Act says about it in Section 347.163.
What is considered “doing business” in Missouri?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Missouri? The S.O.S. website says “whether an entity is doing business in the state is determined on a case-by-case basis,” and advises LLCs to get legal assistance to determine what is and isn’t “doing business.” In most states, however, you are considered to be “doing business” and required to foreign qualify if:
- Your LLC maintains offices, stores, warehouses, distribution centers, or have some other type of physical presence in the state.
- There are salespeople, agents, or representatives doing business on your behalf in the state
Again, if you’re unsure whether or not you need to file for foreign qualification in Missouri, it’s best to seek legal counsel.
Could I be exempt from foreign qualifying in Missouri?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Missouri. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Maintaining or defending any action or lawsuit in a Missouri court
- Dealing with internal business affairs, like holding meetings for managers, members, shareholders, etc.
- Maintaining in-state bank accounts
- Borrowing money or creating evidence of debt
- Securing and collecting debts
- Transacting business in interstate commerce
- A single transaction, not in a series of similar transactions, taking place within a 30-day window
If your only business activities in Missouri consist of items on this list, you’re likely exempt from foreign qualifying. But considering the potential penalties, it might be worth speaking with an attorney anyway to be absolutely sure.
How to Foreign Qualify your LLC in Missouri
Foreign qualification in Missouri 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 Missouri, the cheapest and quickest method is to file online through the Secretary of State website. Here’s how:
- Go to the Corporations Online Portal.
- Create an account (if you haven’t already)
- Under “LLC Filings,” select “Create LLC”
- From the dropdown boxes, choose “Limited Liability Company” and “Foreign”
- Follow the onscreen instructions to complete the form
- Enter your payment information to pay the $50 fee
Or, if you prefer, you can file via postal mail. Download and complete the “Application for Registration of a Foreign LLC.” Send your finished form and a check (made out to “Secretary of State”) for $105 to:
Secretary of State, Corporations Division
P.O. Box 778
Jefferson City, Missouri 65102
They will also accept hand-delivered forms, so if you’re local to Jefferson City, drop it off at:
600 W. Main St., Rm. 322
Jefferson City, Missouri 65102
Along with your completed form – whether online or on paper – you will need to submit a valid Certificate of Existence (or Certificate of Good Standing) from the state where your LLC was formed. It must not be more than 60 days old.
Processing times vary depending on how you file. Online forms are processed in 24 hours, mailed ones in 4-7 business days, and in-person submissions while you wait.
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
New state, new business name rules. Be sure to check your name’s compliance with Missouri state law before submitting your application. Your LLC name must:
- Use one of the following – “limited company,” “limited liability company,” “LC,” “LLC,” “L.C.,” or “L.L.C.”
- Not include the words “corporation,” “incorporated,” “limited partnership,” “limited liability partnership,” or any forms/abbreviations of these terms.
- Not use any terms that imply affiliation with a governmental agency
- Be distinguishable from every other business entity name on file with the Missouri Secretary of State
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 Missouri 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 Missouri. For a $100 service fee, they’ll handle that paperwork so you don’t have to.