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 Oklahoma, you may need to complete a foreign qualification in Oklahoma before you can expand there.
What happens if I fail to foreign qualify before doing business in Oklahoma?
Foreign qualifying is essentially asking permission to do business in the state of Oklahoma. 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 Oklahoma yields consequences that are far costlier than registering in the first place.
If you fail to foreign qualify, your business will no longer be allowed to commence or maintain an action or proceeding in any Oklahoma court. Further, the Attorney General can cut your LLC off from its business activities in the state. If caught transacting business without authorization, the Secretary of State will be appointed as your registered agent until your company is properly registered.
But it won’t remove your LLC’s presence from the state completely. Transacting unauthorized business will not keep your LLC from defending a lawsuit, and it won’t invalidate any of your existing contracts.
If you’re interested in the legal context for these penalties, check out the Oklahoma Revised Statutes §18-2048 and §18-2050 under Title 18 of the state’s Revised Statutes.
What is considered “doing business” in Oklahoma?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Oklahoma? You won’t find a whole lot of specifics online or in the Revised Statutes. But 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 maintains a physical presence in the state. This can mean office buildings, warehouses, stores, or other structures
- There are salespeople, agents, or other representatives conducting business on your behalf in the state.
Some of this vagueness surrounding the term “doing business” can understandably cause confusion, so if you’re unsure whether or not you need to foreign qualify in Oklahoma, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Oklahoma?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Oklahoma. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Settling, defending, or maintaining a legal proceeding in Oklahoma
- Activities solely concerning internal affairs, like meetings of managers or members
- Maintaining in-state bank accounts
- Having offices or agencies for the exchange and transfer of the LLC’s own securities
- Selling products or services through independent contractors
- Completing orders that take place outside the state before they become contracts
- Creating or acquiring indebtedness, or collecting certain debts.
- Transacting business in interstate commerce
- Selling or transferring in-state property
- Completing an isolated transaction, not one in a series of similar actions, within 30 days
- Acquiring royalties or other non-operating mineral or leasehold interests
Take a step back and think of all your LLC’s business activities in Oklahoma. Do you see them on this list? If so, you’re likely exempt from foreign qualifying. It’s a good idea to read over the more detailed list found in §18-2049 of the Revised Statutes Title 18. If you have any questions or concerns, discuss them with legal counsel.
How to Foreign Qualify your LLC in Oklahoma
Foreign qualification in Oklahoma 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 Oklahoma, you can do so online, by mail, or in person. Which is the best option? Filing online is the most efficient, but they’re all equally effective, so choose the one that appeals to you. Here are some directions for each:
Keep in mind that with each of these filing methods, you’ll also need to submit an official Certificate of Existence or Certificate of Good Standing (not more than 60 days old) from your LLC’s home state. Reach out to your home state’s government to obtain one.
Online: Start by going to the Secretary of State’s Entity Filings page. On the Business Services homepage, all you have to do is click “Business Entity” under “File Online.” Scroll down just a little bit and you’ll see a column titled “Foreign Organizations” on the right side. Underneath, select “Foreign Limited Liability Company,” follow the onscreen directions, and you’ll be done in no time. You can pay the application’s $300 fee via card through the Entity Filings portal.
By Mail: If you just love the feeling of a paper form, you can download and print one from the S.O.S. Downloadable Business Forms page. The document you want is listed as “Registration of Foreign Limited Liability Company Forms and Procedures.” There are detailed instructions for the form’s completion on its first two pages. When you’re finished, gather your form, Certificate of Existence, and $300 check (made out to “Oklahoma Secretary of State,”) and mail them to:
Oklahoma Secretary of State
421 N.W. 13th St., Suite 210
Oklahoma City, Oklahoma 73103
In Person: Finally, if you’re local to OKC, feel free to drop off your materials in person (to the address above) and pay your $300 fee by card or check.
The Oklahoma Secretary of State normally processes these applications in 3-5 business days (for any filing method), although you can pay an addition $25 for expedited service, but only if you’re submitting your materials in person.
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
It would be frustrating to hit a snag in your registration process because your company’s name doesn’t follow Oklahoma’s requirements, so make sure to check beforehand. Your LLC name must:
- Use the words “limited liability company” or “limited company,” or one of the following abbreviations: “LLC”, “LC”, “L.L.C.”, or “L.C.”. The word “limited” may be abbreviated as “LTD.” and the word “Company” as “CO.”
- Available for use and distinguishable from every other business name registered or reserved with the Oklahoma Secretary of State’s Office. Check your name availability 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 Oklahoma 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 Oklahoma. For a $100 service fee, they’ll handle that paperwork so you don’t have to.