Pennsylvania LLC Foreign Qualification: Here’s What to do

What happens if I fail to foreign qualify before doing business in Pennsylvania?

Foreign qualifying is essentially asking permission to do business in the state of Pennsylvania. 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 Pennsylvania yields consequences that are far costlier than registering in the first place.

If you fail to foreign qualify, your business will be prohibited from commencing or maintaining any lawsuits in Pennsylvania courts. However, it won’t invalidate your current contracts, nor will it prevent you from defending any in-state lawsuit. Further, a single member or manager of your LLC cannot be held responsible for your company’s debts or other liabilities just because you conducted unauthorized business in the state.

For more on these penalties and other foreign LLC requirements, take a look at the Pennsylvania General Assembly, Title 15.

What is considered “doing business” in Pennsylvania?

We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Pennsylvania? Unfortunately, there isn’t a clear answer in the state laws, which can potentially lead to some confusion. However, tax laws tell us that you are considered to be “doing business” in most states and required to foreign qualify if:

• Your LLC has some type of physical economic presence in the state, like offices, stores, warehouses, and similar structures.
• Your employees and/or other representatives are making in-state transactions on your behalf.

Generally, if your LLC makes a profit off of Pennsylvania’s economy, you’re doing business there.

If you’re unsure whether or not you need to file for a foreign qualification in Pennsylvania, we suggest seeking legal counsel.

Could I be exempt from foreign qualifying in Pennsylvania?

The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Pennsylvania. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:

• Defending, mediating, maintaining, or settling a lawsuit in a Pennsylvania court
• Dealing with internal business affairs, like holding LLC member and/or manager meetings
• Having bank accounts
• Maintaining offices or agencies for the transfer, exchange, or registration of the LLC’s own securities
• Selling products or services through independent contractors
• Facilitating and completing orders outside the state before they turn into contracts
• Creating or acquiring indebtedness
• Securing and collecting debts
• Completing a single transaction that is not in a series of similar transactions
• Owning, without more, property
• Transacting business in interstate or foreign commerce

While this list is fairly comprehensive, the Pennsylvania General Assembly has one that offers more detail in Title 15 § 403. See all of your Pennsylvania business activities here? Nice! You’re likely off the hook with foreign qualification. But you should still speak with an attorney if you have any hesitations.

How to Foreign Qualify Your LLC in Pennsylvania

Foreign qualification in Pennsylvania 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 Pennsylvania, you need to file a “Foreign Registration Statement” by mail or online.

Online filing is the quickest way to get your business registered. To get started, go to PENN File, Pennsylvania’s online filing portal. You’ll need to create an account before doing anything else. After doing so, find the form for foreign registration and follow the instructions to input your information.

Your second option is postal mail. For this method, download the “Foreign Registration Statement” from the Department of State’s Registration Forms page. The form itself has in-depth instructions for its completion on pages 3-5. To comply with D.O.S. standards, fill it out electronically using a PDF filler like Adobe Acrobat, or – if you want to write by hand – using blue or blue-black ink. When you’ve completed the form, send it to:

Pennsylvania Department of State

Bureau of Corporations and Charitable Organizations

P.O. Box 8722

Harrisburg, PA 17105-8722

But don’t send it just yet! Along with your finished form, you will need to include two more items:

• A “Docketing Statement” (to ensure efficient processing)
• A $250 fee, payable by card or check (made out to the “Department of State”)

The typical processing time is 15 business days, plus mailing time. But if you’re in a hurry, you have three expedited service options: same-day for $100, three-hour for $300, and one-hour for $1,000. To request one of these options, include an “Expedited Service Request Form” with your other documents.

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

One more detail to keep in mind. Pennsylvania has its own requirements for business entity names. To avoid delays in your registration process because of name noncompliance, check to confirm that your business name follows all the rules.

Your LLC name must use the terms “company,” “limited,” or “limited liability company,” or an abbreviation of one of those terms. Plus, it must be available in the Department of State records and distinguishable from all other registered and reserved business entity names. Perform a Pennsylvania LLC name search to make sure the name you want is available.

You can also reserve your Pennsylvania business name if you’re not quite ready to foreign qualify your LLC.

Should I hire a service to file my Pennsylvania 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 Pennsylvania 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 Pennsylvania 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 Pennsylvania foreign LLC professionally registered, go with an online business service provider. There are plenty of reputable companies that can help you out with Pennsylvania 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!

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 Pennsylvania 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.