Are you thinking about expanding your business operations into another state — or maybe several other states?
These days, that’s pretty normal, but you need to understand how foreign qualifications work.
Pursuing growth opportunities across state lines
It’s one thing to have an internet business or mail-order business that delivers out-of-state. It’s entirely another to open a physical location for your business in another state.
A “foreign qualification” sounds like it’s something you need to do business overseas, but it actually refers to the process of registering your business for operations in a different state. You may need a foreign qualification for a store, restaurant, shipping center or even a warehouse that you keep for logistical reasons.
In fact, even if you just frequently “do business” in person via meetings in another state, you may need to apply for foreign qualification. It all depends on the “strength of nexus,” or level of connection your business has to the state in question.
What do you need to do to get a foreign qualification? It depends on the state. You may have heard that state governments go out of their way to attract new business operations and investors, so some states make it very easy — but others do not.
In general, you may have to contact a number of government entities, including:
- The state’s secretary of state
- The state’s department of revenue
- The state’s department of labor
- The Small Business Administration
It’s also a good idea to contact the local chamber of commerce.
Understanding whether you need foreign qualification or not (and how to obtain it) in a specific state isn’t always easy. Experienced guidance can relieve you of a lot of the burden throughout the process.