Does a Single Member LLC Need to Register to Do Business in Another State?

By Heather Frances J.D.

Organizing your business as an limited liability company provides the owners, known as members, with liability protection offered by state law. When you register your business as an LLC, it gives you legal authority to conduct business in the state in which your register. If your LLC, whether it is a single-member or multi-member LLC, starts transacting business in another state, you typically must register in that state as well. However, not all operations require a business to register, but LLCs that do not register as required can face penalties.

Organizing your business as an limited liability company provides the owners, known as members, with liability protection offered by state law. When you register your business as an LLC, it gives you legal authority to conduct business in the state in which your register. If your LLC, whether it is a single-member or multi-member LLC, starts transacting business in another state, you typically must register in that state as well. However, not all operations require a business to register, but LLCs that do not register as required can face penalties.

LLC Status Is Determined by State Law

A business registered to do business in one state does not automatically have the right to do business in another state. Typically, registration in the LLC's home state does not cross state lines. Likewise, each state has its own rules for registering an out-of-state, or foreign, LLC. It is through this registration in a new state that the foreign LLC obtains legal status in the new state, allowing it to conduct business there.

Ready to start your LLC? Start an LLC Online Now

Transacting Business

Generally, if you are not actually transacting business in a new state, you do not have to register as a foreign LLC. For example, an LLC can likely drive one of its vehicles into another state without first registering in that drive-through state. However, an LLC cannot legally set up a retail store in another state without registering with the new state. Transacting business typically includes repeated business transactions in the new state, but there is no bright-line rule about what level of commerce is considered "transacting business." Each state makes its determinations based on the circumstances of a particular business.

Registering in Another State

Limited liability companies that want to transact business in another state typically must register with that state's secretary of state or its equivalent business registration office. Each state creates its own filing forms, requirements and fees. Generally, a foreign LLC must submit a form stating its name in its home state, the name it will use in the new state, where it was originally formed, the purpose of the business, its office address, its registered agent in the new state and whether it is member-managed or manager-managed. The new state may require the LLC to provide proof of its formation and status in its home state. Once the foreign company registers, it may have to file annual reports and pay annual fees.

Penalties for Failing to Register

Registration can seem like an unnecessary hassle, but an LLC can face penalties for transacting business in a new state without properly registering first. For example, an unregistered LLC does not have legal standing so it cannot file lawsuits in the new state if it is wronged. Also, courts in the new state can issue orders prohibiting the business from continuing operations, as well as forcing the business to pay the fees and taxes that it would have owed if it had registered as required, along with late fees.

Ready to start your LLC? Start an LLC Online Now
How to Establish a DBA

References

Related articles

How to Maintain an LLC

Maintaining an LLC, or limited liability company, involves meeting the requirements of of your state's relevant regulatory agency as well as the state's taxing authority and the IRS. Certain record-keeping is required by law but is almost crucial to successfully filing required reports, anyway. Strong record-keeping will also help you stay compliant and current with your taxes.

How to Relocate an LLC to North Carolina

Relocating your LLC to North Carolina can be done in several ways. North Carolina law allows an out-of-state LLC, also called a foreign LLC, to register to do business in North Carolina while keeping the LLC active in the state where it was formed. The law also permits the foreign LLC to convert to a North Carolina LLC, if it will cease to be active in its state of formation. You can also dissolve your foreign LLC and reorganize it as a new North Carolina LLC.

Cancelling a DBA

A "doing business as" name, also known as a trade name and a fictitious business name, is the name under which a business operates that may be different from its original, official name. A company may use DBAs to conduct business under a different name for various reasons. For example, a foreign company may use a DBA in a specific location because its creation name is being used by another business in the same area. When a business no longer needs its DBA name, it can cancel the name registration with the local government agency that handles DBA registrations.

LLCs, Corporations, Patents, Attorney Help

Related articles

How to Transfer a C-Corporation From Another State to Florida

Like some other business types, C corporations, or corporations that are taxed separately from their owners, must ...

LLC Business Registration

While a limited liability company may be properly organized and operated according to the laws of its home state, this ...

Corporation: Withdrawal Vs. Dissolution

A corporation is an independent business entity, formed under state law by filing articles of incorporation. The state ...

What Does DBA Mean in Business?

In the business world, DBA - which stands for "doing business as" - is a vitally important acronym to know. ...

Browse by category