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 Oregon, you may need to complete a foreign qualification in Oregon before you can expand there.
What happens if I fail to foreign qualify before doing business in Oregon?
Foreign qualifying is essentially asking permission to do business in the state of Oregon. 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 Oregon 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 maintain an lawsuit or proceeding in Oregon courts
- Can have any of its ongoing legal proceedings stayed by a court
- Will owe the state all of the fees it would have paid for the time it was doing in-state business had it been properly registered
Those penalties aren’t worth the risk. Not only will your LLC lose its legal footing in the state, but it will also need to pay all the accumulated fees at once, and they can add up quickly.
But if you transact business without authorization in Oregon, it won’t completely disengage your LLC from its in-state activities. Your current contracts will still be considered valid, and you will still be able to defend lawsuits in state courts.
Want to dig into the legal context for these penalties? Check out the Oregon Revised Statutes Section 63.704.
What is considered “doing business” in Oregon?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Oregon? Many states are vague about this definition, but the Oregon Secretary of State website provides a few specifics. They say you are considered to be “doing business” in Oregon and required to foreign qualify if:
- You have a stock of goods stored in the state
- Your LLC has an office or another place of business in the state (like stores or warehouses)
- Employees or other representatives are providing goods/services to customers in the state for your LLC
- Your LLC has any other economic presence through which it uses the Oregon economy to produce income
Generally, according to the site, “if you expect to profit from your activities in Oregon, you are probably doing business in Oregon.”
If you’re unsure whether or not you need to file for foreign qualification in Oregon, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Oregon?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Oregon. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Defending, settling, or maintaining any proceeding in an Oregon court
- Facilitating activities solely related to internal affairs, like meetings of managers or members
- Maintaining bank accounts
- Holding in-state offices/agencies for the exchange or registration of the LLC’s own securities
- Selling products or services through independent contractors
- Creating or acquiring indebtedness
- Securing and collecting debts.
- Owning real or personal property in Oregon
- One isolated transaction, completed within 30 days, not in line with a series of similar transactions
- Transacting business in interstate commerce
See all of your Oregon business activities listed here? You’re most likely exempt from foreign qualifying there. However, it’s still a good idea to check over the details in the Revised Statutes Section 63.701 and contact an attorney if you have any questions.
How to Foreign Qualify your LLC in Oregon
Foreign qualification in Oregon 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 Oregon, the Application for Authority is your go-to form, and you can submit it online, by mail, or in person. Find resources and directions for all three options here.
Want to get it done as quickly as possible? File online. On the Foreign LLC page, click “Register online” in the Application for Authority section. This will take you to the online filing portal, where you can create an account to continue. Then, just follow the onscreen instructions and when you finish, you’ll be able to pay the $275 fee with a credit or debit card.
But if you’re someone who wants to leave a paper trail, download the application here. Complete it and include a $275 check, made payable to “Corporation Division.” The Secretary of State provides detailed instructions if you need assistance. Finished? Mail it to:
Secretary of State – Corporation Division
255 Capitol St. NE, Suite 151
Salem, OR 97310-1327
Regardless of your filing method, you’ll need to provide verification from the state in which your LLC was formed. This can take the form of a web-verifiable registry number or a Certificate of Existence (current within 60 days).
Filing for foreign qualification is a big step, so if you’re eager to see when your LLC has been approved, you can check the Secretary of State’s processing times, updated regularly on the Business homepage.
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
Don’t forget that, like other states, Oregon has its own business name requirements. Make sure to follow them, or you might hit a snag in your foreign qualification process. The state requires that your LLC name:
- Contains an identifier like “limited liability company,” “L.L.C.,” or LLC”
- Doesn’t use the terms “cooperative,” “corporation,” “corp.,” “incorporated,” “Inc.,” “limited partnership,” “L.P.,” “LP,” “Ltd.,” “limited liability partnership,” “L.L.P.,” or “LLP”
- Is distinguishable and available in the Secretary of State business records. 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 Oregon 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 Oregon. For a $100 service fee, they’ll handle that paperwork so you don’t have to.