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 Wyoming, you may need to complete a foreign qualification in Wyoming 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 Wyoming?
Foreign qualifying is essentially asking permission to do business in the state of Wyoming. 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 Wyoming yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business:
- May not commence or maintain any lawsuit in Wyoming courts
- Could have its existing legal actions stayed by Wyoming courts
- Will be liable for all of the fees and taxes it would have paid had it been properly registered for its whole time in Wyoming, plus 18% interest
- Will be subject to an additional $5,000 penalty
Say you’ve been doing business in Wyoming for three years. Let’s add up your penalties. Start with that hefty $5,000 fine. Then, let’s add $100 for the Certificate of Authority and $50 per year for annual reports – plus 18% interest – for another $295. That’s a total of $5,295, and it doesn’t even include taxes. In short, it’s best to avoid this entirely by foreign qualifying as soon as you begin doing business in Wyoming.
Check out the Wyoming Statutes, section 17-16-1502 for more info on these penalties.
What is considered “doing business” in Wyoming?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Wyoming? Unfortunately, you won’t find a specific definition in the state’s LLC Act. Even so, 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, warehouses, stores, or another type of continuous physical presence, or nexus, in the state.
- Employees, salespeople, or other representatives are conducting business on behalf of your LLC in the state.
Taxes have a role to play in this too. Wyoming charges all of its business entities with a license tax (also known as a franchise tax). Foreign qualification notifies the state that you will need to pay it. It might be tempting to avoid these payments by flying under the radar, but resist the urge! It will lead to more severe fines in the future.
If you’re unsure whether or not you need to file for foreign qualification in Wyoming, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Wyoming?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Wyoming. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Maintaining, defending, or settling a lawsuit in Wyoming courts
- Carrying on activities solely concerning internal affairs, such as member or manager meetings
- Holding in-state bank accounts
- Keeping offices or agencies for the management of the LLC’s own securities
- Selling through independent contractors
- Facilitating orders that require acceptance outside the state before they become contacts
- Lending money or acquiring indebtedness
- Securing and collecting certain debts
- Owning real or personal property in Wyoming
- Completing a single transaction—outside of your typical business dealings—within a 30-day window
- Doing business in interstate commerce
If you find all of your in-state business activities among these exemptions, you most likely don’t have to foreign qualify. Also, be sure to read over the detailed list found in Section 17-16-1501 of the Wyoming Statutes.
How to Foreign Qualify your LLC in Wyoming
Foreign qualification in Wyoming 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 Wyoming, start by downloading and printing an “Application for Certificate of Authority.” This is your ticket to doing business in the state.
To streamline the process, gather all of the required information beforehand. Here’s what you’ll need:
- Your LLC name
- The state of formation
- The date you formed the LLC
- The period of duration
- Your LLC’s mailing address and principal office address
- Your Wyoming registered agent’s name and address (cannot be a P.O. box)
- The date your LLC started doing business in Wyoming, or the date you plan to begin doing business there
- Your signature and contact information
But a completed form is not all you need to foreign qualify. You also need to include:
- An original Certificate of Existence or Good Standing, not more than 60 days old, from the state where you initially formed your LLC.
- A $100 filing fee, which you can pay with a check made out to “Wyoming Secretary of State.”
- A “Consent to Appointment” signed by your Wyoming registered agent (find it on the last page of the application).
Got everything? Mail it off to:
Wyoming Secretary of State
2020 Carey Avenue, Suite 700
Cheyenne, WY 82002-0020
If you live near Cheyenne, you’re also allowed to drop your materials off in person at the same address.
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’s important to check Wyoming’s business naming requirements to make sure that your LLC name complies. Otherwise, it could delay your foreign qualification. Your business name must:
- Use one of the following terms:
- Limited liability company
- Ltd. liability co.
- Limited liability co.
- Limited company
- Not use any language that implies a purpose other than it’s real business function. For example, if you run a pizza shop, your LLC name shouldn’t be “ABC Pet Store.”
- Not be the same as, or deceptively similar to, any other name currently on record with the Secretary of State.
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 Wyoming 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 Wyoming. For a $100 service fee, they’ll handle that paperwork so you don’t have to.