Nebraska 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 Nebraska, you may need to complete a foreign qualification in Nebraska before you can expand there.
What happens if I fail to foreign qualify before doing business in Nebraska?
Foreign qualifying is essentially asking permission to do business in the state of Nebraska. 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 Nebraska yields consequences that are far costlier than registering in the first place.
If you fail to foreign qualify, your business is prohibited from bringing or maintaining a lawsuit in Nebraska courts. Plus, the Attorney General can halt your LLC’s business activity in the state.
Transacting business without properly qualifying, however, will not cancel or invalidate your current contracts. Nor will it stop your LLC from defending a lawsuit in Nebraska courts.
That said, the loss of your in-state revenue stream and legal rights is a frightening thought, so it’s best to foreign qualify right away.
You can read more about possible penalties in Nebraska Revised Statute 21-162.
What is considered “doing business” in Nebraska?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Nebraska? Like many other states, Nebraska law is fairly vague on the topic. But other state and tax laws indicate that you are considered to be “doing business” in most cases and required to foreign qualify if:
- Your LLC maintains a physical presence, or nexus, in the state. This might include offices, stores, warehouses, distribution centers, or other structures.
- There are salespeople, agents, or representatives are conducting business on behalf of your LLC in the state.
Depending on how you’ve set up your LLC, you might need to pay certain business taxes. By foreign qualifying, you’re informing the state about your tax status, so they know what you’ll be paying. It might seem economical to avoid these taxes by not qualifying, but resist the temptation! It could lead to heftier penalties in the long run. Check out the Nebraska Department of Revenue website to learn more.
If you’re unsure whether or not you need to file for foreign qualification in Nebraska, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Nebraska?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Nebraska. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Maintaining, defending, settling, etc. an action or proceeding in a Nebraska court
- Activities concerned only with internal affairs, like manager meetings
- Maintaining bank accounts
- Having offices/agencies for the maintenance of the LLC’s own securities
- Selling products or services through independent contractors.
- Completing orders outside of the state before they become contracts
- Creating or acquiring indebtedness, or securing debts
- Facilitating a single transaction, within 30 days, that isn’t in a series of similar transactions
- Transacting business in interstate commerce
Take a look at a more detailed list in Nebraska Revised Statute 21-157. After reviewing them carefully, if you’ve determined that your business activities in Nebraska all appear there, you’re likely in the clear! But if you’re not sure, check with an attorney.
How to Foreign Qualify your LLC in Nebraska
Foreign qualification in Nebraska 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 Nebraska, you’ll need to get your hands on a Certificate of Authority. You can apply for one using this form, submitted either online or by mail.
Even if you’re submitting it online, you’ll need to fill it out, so first download the application and enter the appropriate information. Then, follow these directions:
- Go to the Secretary of State’s Forms and Fees page
- Scroll down to the section titled Limited Liability Company (Foreign)
- To the right of “Certificate of Authority,” click eDelivery
- If you plan on using the eDelivery system frequently, you can create a subscriber account. Otherwise, select “forming a new entity/qualifying a foreign entity” at the bottom to continue as a non-subscriber
- On the next page, input your LLC information and upload your completed document
- Follow the rest of the instruction and pay your $120 fee with a Visa, Mastercard, Discover, or American Express
Or, take two copies of that completed form and pop it in the mail with a check for $120 (made out to “Secretary of state). Here’s the address:
Robert B. Evnen, Secretary of State
P.O. Box 94608
Lincoln, NE 68509
Along with your form, the Secretary of State requires a Certificate of Good Standing (or Certificate of Existence) – dated within 60 days – from the state where you formed your LLC.
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
Since you’re taking off in a new state, there will be new rules to remember about your business name. As you submit your documents, check to confirm that your name (or fictitious name) follows them. In Nebraska, your LLC name must:
- Use one of the following terms – “limited liability company,” “limited company,” “L.L.C.,” “LLC,” “L.C.,” or “LC”
- Be distinguishable and not deceptively similar to any other entity names on file with the Secretary of State
Find more information about these requirements in Nebraska Revised Statute 21-108.
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 Nebraska 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 Nebraska. For a $100 service fee, they’ll handle that paperwork so you don’t have to.