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 West Virginia, you may need to complete a foreign qualification in West Virginia before you can expand there.
Important Note: If you’d like to save time and have the foreign qualification paperwork taken care of for you, look into a reliable online service like Northwest Registered Agent.
What happens if I fail to foreign qualify before doing business in West Virginia?
Foreign qualifying is essentially asking permission to do business in the state of West Virginia. 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 West Virginia yields consequences that are far costlier than registering in the first place.
If you fail to foreign qualify, your business will no longer be able to maintain an action or proceeding in West Virginia courts. Additionally, the Attorney General can cut off your business activities in the state until you’ve properly registered, and the Secretary of State will be appointed as your agent for service of process.
Those are serious penalties, but even so, conducting unauthorized business will not totally stop your business activity in West Virginia. For example, it won’t invalidate any of your existing in-state contracts, and it won’t prevent you from defending a lawsuit in court.
See the West Virginia LLC Act, Section 31B-10-1008 for more information.
What is considered “doing business” in West Virginia?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in West Virginia? If you go to the state’s LLC Act looking for specific answers, you’ll have a hard time finding them. But tax laws tell us that you are considered to be “doing business” in most cases and required to foreign qualify if:
- Your LLC has offices, stores, warehouses, or other established, continuous physical presences in the state
- Your LLC has employees or other representatives making transactions on its behalf in the state
Think of it this way: if your LLC is making profits off of West Virginia’s economy, you’re probably conducting business there.
If you’re unsure whether or not you need to file for foreign qualification in West Virginia, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in West Virginia?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in West Virginia. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Defending or settling an action or proceeding in West Virginia courts
- Activities that only concern internal affairs, like holding meetings of managers or members
- Maintaining bank accounts
- Keeping offices or agencies for the management of the LLC’s own securities
- Selling products or services through independent contractors
- Facilitating orders that require acceptance outside the state before becoming contracts
- Creating or acquiring indebtedness, or collecting certain debts
- An isolated transaction, not in a series of similar ones, completed within 30 days
- Transacting business in interstate commerce
Check out the more exhaustive list in Section 31B-10-1003 of the West Virginia’s LLC Act. Are your only in-state business activities present? Congratulations! You’re likely exempt from foreign qualifying. However, it’s wise to seek legal counsel if you’re unsure.
How to Foreign Qualify your LLC in West Virginia
Foreign qualification in West Virginia 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 West Virginia, the Secretary of State has compiled all the information and links you need on this helpful page. There’s both an online and paper option for submitting your application.
Both application processes require you to submit a Certificate of Existence (or Good Standing) from the state where you formed your LLC. This document must be from the current tax year. Contact your home state’s Secretary of State to obtain one.
If you want to get your LLC foreign qualified as quickly as possible, file online. You can do so through the One Stop Business Portal. First, create an account to log in. Then, select “Register Your Business” from the navigation bar and click the “New Business Registration” button. Follow the onscreen prompts to enter your LLC’s information and you’ll be done in no time.
Prefer a hard copy? No problem. Download the “Application for Certificate of Authority” and enter your LLC’s information. Pages 4-5 of the form contain step-by-step instructions for how to complete it. Along with your completed paper application, you’ll need to submit a couple of other things:
- Your Certificate of Existence
- A $150 payment by check or card
- A “Customer Order Request” (page 7 of the application)
- An “e-Payment Authorization” (page 9 of the application, only if paying via card)
When you’re finished, mail your materials to the One-Stop Business Center at 1615 Washington Street East, Charleston, WV 25311.
Sometimes foreign qualification is a time-sensitive process, so if you need your form processed right away, the Secretary of State offers three different expedited service options. Indicate your expedited service selection on the Customer Order Request. 24-hour service costs $25, 2-hour service costs $250, and 1-hour service is $500. If requesting expedited processing, write “EXPEDITE” and the level of service on your envelope.
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
As you wrap up the foreign qualification process, take a moment to confirm that your LLC name follows West Virginia’s entity naming rules. You wouldn’t want your business name to hold up your registration. In West Virginia, your LLC name must:
- Use one of the following business identifiers: “Limited Liability Company” (LLC, L.L.C,), or “Limited Company” (LC, L.C., Ltd. Co.)
- Be distinguishable from every other business entity name registered or reserved in the Secretary of State’s records. To check your name availability, call 304) 558-8000 or 1-866-767-8683.
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 West Virginia 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 West Virginia. For a $100 service fee, they’ll handle that paperwork so you don’t have to.