When to Register Foreign LLC – Law 4 Small Business, P.C. (L4SB)

Definition

A foreign limited liability company, or foreign LLC, is defined as a LLC that was formed in one state (i.e. its domestic state) and registered (as a foreign entity) in other states because it is transacting business in those other states. The foreign registration tells the appropriate state or states about the company and where it’s domesticated, permitting it to conduct business in that state.

When to Register a LLC as a Foreign LLC

Unfortunately, this is a very hard question to answer as most states are unwilling to advise businesses on what it means to “transact business” or “conduct business” in the state, and instead, most states have rules on what is NOT conducting business in the state.

In general, simply “doing business on the Internet” without something more, is not enough to say you’re “conducting business” in a particular state. Of course, if a majority of your business seems to be coming from a particular state, then it becomes harder for you to say you’re not “conducting business” in that state. Similarly, if you’re advertising exclusively in a state in an attempt to obtain business in that state, it will be hard for you to say you’re not “conducting business” in that state.

If any of the following questions apply to you, you should really consider looking more carefully at the law within that state to determine whether you should file your LLC as a Foreign LLC in that state:

Own real or tangible property in a state?
Employing one or more people (as W2 employees, including yourself) in a state?
Operating a retail outlet or store in a state?
Obtaining a significant portion of your revenues (25% or more) from a particular state?
Maintaining a portion of your operations within a particular state?
Devoting specific resources or advertising within a particular state?
Required to have a special license, permit or other permission within a particular state?
Would a reasonable person believe you’re transacting or otherwise conducting business in the state?

To help you evaluate this, we’ve compiled the relevant law in each of the 50 states. Select your state, and see what the law says about “conducting business” in the relevant state. We’ve done our best to summarize the legal issues, cite to the relevant statutes, and indicate what the potential penalties for not properly registering may be.

In general, almost all states have some form of financial penalty. Most states won’t permit unregistered companies from bringing a lawsuit in the state. And, some states will void your contracts.

If you have questions, please do not hesitate to contact us or a good business attorney in the relevant state in question. This article, as well as this website, should not be used as a substitute for professional tax and legal advice by competent professionals.

Overall Summary for Alabama

There are no statutes defining what is or is not “transacting business” in Alabama, although the penalties for transacting business without registering are somewhat severe: Cannot bring a lawsuit in the state, and your contracts are void (with exceptions).

Penalties of Not Registering a Foreign LLC

Ala. Code § 10-2B-15.02 (2009) Consequences of transacting business without authority.

(a) A foreign corporation transacting business in this state without a certificate of authority or without complying with Chapter 14A of Title 40 may not maintain a proceeding in this state without a certificate of authority. All contracts or agreements made or entered into in this state by foreign corporations prior to obtaining a certificate of authority to transact business in this state shall be held void at the action of the foreign corporation or by any person claiming through or under the foreign corporation by virtue of the contract or agreement; but nothing in this section shall abrogate the equitable rule that he who seeks equity must do equity.

(b) The failure of a foreign corporation to obtain a certificate of authority shall not impair the validity of any contract or agreement heretofore or hereafter entered into and consisting of a mortgage upon real property or an interest in real property in this state, and the note secured thereby, where the mortgage is insured by the Federal Housing Administration or guaranteed by the Veterans Administration, if the foreign corporation shall have thereafter obtained a certificate of authority. In all actions against a foreign corporation or against any person claiming under a foreign corporation by virtue of a void contract, the foreign corporation or person claiming under it shall be estopped from setting up the fact that the contract or agreement was made in violation of the law.

Overall Summary for Alaska

There are no statutes defining what is “transacting business” in Alaska, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Alaska are: heavy fines (up to $10,000 per year), cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Alaska Stat. § 10.06.718.: Activities not constituting transacting business in this state.

Without excluding other activities that may not constitute transacting business in this state, a foreign corporation is not considered to be transacting business in this state, for the purposes of this chapter, by reason of carrying on in this state any one or more of the following activities:

maintaining, defending, or settling an action, suit, or administrative or arbitration proceeding, or the settlement of claims or disputes;
holding meetings of directors or shareholders of the corporation, or carrying on other activities concerning the internal affairs of the corporation;
maintaining bank accounts;
maintaining an office or agency for the transfer, exchange, and registration of securities of the corporation, or appointing and maintaining a trustee or depositary for the securities of the corporation;
making sales through independent contractors;
soliciting or procuring orders by mail, through employees, agents, or otherwise, if the orders require acceptance outside the state before becoming binding contracts;
creating, as borrower or lender, or acquiring indebtedness or mortgages or other security interests in real or personal property;
securing or collecting debts, or enforcing rights in property securing debts;
transacting business in interstate commerce;
conducting an isolated transaction completed within a period of 30 days not in the course of a number of repeated transactions of like nature.

Penalties of Not Registering a Foreign LLC

AK Stat § 10.06.710 (2014) Liability for transacting business without certificate of authority.

A foreign corporation that transacts business in the state without a certificate of authority is liable to this state, for the years or portions of years during which it transacts business in the state without a certificate of authority, in an amount equal to all fees and corporation taxes that would have been imposed by this chapter on the corporation if it had applied for and received a certificate of authority to transact business in this state as required by this chapter and filed all reports required by this chapter, plus all penalties imposed by this chapter for failure to pay the fees and corporation taxes, plus a penalty of up to $10,000 per calendar year or portion of a calendar year for each year it transacts business in this state without a certificate of authority. The attorney general shall bring proceedings to recover amounts due the state under this section.

AK Stat §10.06.713. Transacting Business Without Certificate of Authority as a Bar to Right to Sue.

A foreign corporation transacting business in this state without a certificate of authority may not maintain an action, suit, or proceeding in a court of this state until it obtains a certificate of authority. A successor or assignee of a foreign corporation transacting business without a certificate of authority may not maintain an action, suit, or proceeding in a court of this state on a right, claim, or demand arising out of the transaction of business by the corporation in this state until a certificate of authority is obtained by the corporation or by a corporation that has acquired all or substantially all of its assets.

AK Stat. § 10.06.715. Transacting business without certificate of authority not affecting contracts and right to defend action.

The failure of a foreign corporation to obtain a certificate of authority to transact business in this state does not impair the validity of a contract or act of the corporation, and does not prevent the corporation from defending an action, suit, or proceeding in a court of this state.

Overall Summary for Arizona

There are no statutes defining what is “transacting business” in Arizona, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Alaska are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Ariz. Rev. Stat. §10-1501. Authority to transact business required.

A. A foreign corporation shall not transact business in this state until it is granted authority to transact business in this state as provided in this chapter from the commission.

B. The following activities, among others, do not constitute transacting business within the meaning of subsection A:

Maintaining, defending or settling any proceeding.
Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs.
Maintaining bank accounts.
Maintaining offices or agencies for the transfer, exchange and registration of the corporation’s own securities or maintaining trustees or depositaries with respect to those securities.
Selling through independent contractors.
Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts.
Creating or acquiring indebtedness, mortgages and other security interests in real or personal property.
Securing or collecting debts or enforcing mortgages and security interests in property securing the same.
Owning, without more, real or personal property.
Conducting an isolated transaction that is completed within thirty days and that is not one in the course of repeated transactions of a like nature.
Transacting business in interstate commerce.
Being a limited partner of a limited partnership or a member of a limited liability company.

C. The list of activities in subsection B is not exhaustive.

D. This section does not apply to insurance corporations or any corporation transacting in this state only the business of lending monies to religious, social or benevolent associations.

Penalties of Not Registering a Foreign LLC

Ariz. Rev. Stat. §10-1502. Consequences of transacting business without authority; penalty

A. A foreign corporation transacting business in this state without a grant of authority shall not be permitted to maintain a proceeding in any court in this state until it is authorized to transact business.

B. The successor to a foreign corporation that transacted business in this state without a grant of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this state until the foreign corporation or its successor obtains authority to transact business.

C. A court may stay a proceeding commenced by a foreign corporation, its successor or its assignee until it determines whether the foreign corporation, its successor or its assignee requires authority to transact business in this state. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains authority to transact business in this state.

D. A foreign corporation that transacts business in this state without authority is liable to this state, for the years or portions of years during which it transacted business in this state without authority, in an amount equal to all fees that would have been imposed by chapters 1 through 17 of this title on the corporation if it had duly applied for and received authority to transact business in this state as required by chapters 1 through 17 of this title and thereafter filed all reports required by chapters 1 through 17 of this title. In addition to all penalties imposed by chapters 1 through 17 of this title for failure to pay the fees, the corporation shall pay a penalty of up to one thousand dollars to this state for violating this section. The attorney general may bring proceedings to recover all amounts due this state under this section.

E. Notwithstanding subsections A and B, the failure of a foreign corporation to obtain authority to transact business in this state does not impair the validity of its corporate acts or prevent it from defending any proceedings in this state.

F. The attorney general or any other person may bring and maintain an action to enjoin any foreign corporation from transacting business in this state without authority. On a foreign corporation obtaining authority, the action shall be dismissed, but the plaintiff shall recover its costs and reasonable attorney fees. A determination by a court of competent jurisdiction in this state that a party to the action is a foreign corporation that was required but failed to qualify as a foreign corporation under chapters 1 through 17 of this title is prima facie evidence against the foreign corporation in any other action brought by or against it by any other person of the requirement to and failure to qualify.

Overall Summary for Arkansas

There are no statutes defining what is “transacting business” in Arkansas, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Arkansas are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Ark. Code. Ann. § 4-27-1501 – Authority to transact business required.

(a) A foreign corporation may not transact business in this state until it obtains a certificate of authority from the Secretary of State.

(b) The following activities, among others, do not constitute transacting business within the meaning of subsection (a) of this section:

Maintaining, defending, or settling any proceeding;
Holding meetings of the board of directors or shareholders, or carrying on other activities concerning internal corporate affairs;
Maintaining bank accounts;
Maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or maintaining trustees or depositaries with respect to those securities;
Selling through independent contractors;
Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
Creating or acquiring indebtedness, mortgages, and security interests in real or personal property;
Securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
Owning, without more, real or personal property;
Conducting an isolated transaction that is completed within thirty (30) days and that is not one in the course of repeated transactions of a like nature;
Transacting business in interstate commerce.

Penalties of Not Registering a Foreign LLC

Ark. Code. Ann. § 4-27-1502. Consequences of transacting business without authority.

(a) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(b) The successor to a foreign corporation that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this state until the foreign corporation or its successor obtains a certificate of authority.

(c) A court may stay a proceeding commenced by a foreign corporation, its successor, or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.

(d)(1) (A) A foreign corporation that transacts business in this state without a certificate of authority shall pay a civil penalty to the state for each year and partial year during which it transacts business in this state without a certificate of authority.

(B) The penalty shall be the total of all fees imposed by this chapter upon a foreign corporation that properly obtains and renews a certificate of authority and all penalties imposed by this chapter for the failure to obtain or renew a certificate of authority.

(2) In addition to the penalty imposed under subdivision (d)(1) of this section, a foreign corporation that transacts business in this state without a certificate of authority shall pay a civil penalty to the state not to exceed five thousand dollars ($5,000) for each year and partial year during which it transacted business without a certificate of authority, beginning with the date it began transacting business in this state and ending on the date it obtains a certificate of authority.

(3) (A) The penalties imposed by this subsection may be recovered in a suit brought by the Secretary of State.

(B) (i) In addition to any civil penalty, if the court finds that a foreign corporation has transacted business in violation of this chapter, then the court shall issue an injunction restraining the foreign corporation from any further transactions or the exercise of any rights and privileges in this state.

(ii) The injunction shall remain in effect until:

(a) All civil penalties and any interest and court costs assessed by the court have been paid; and

(b) The foreign corporation has complied with the provisions of this subchapter.

(e) The failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.

Overall Summary for California

There are no statutes defining what is “transacting business” in California, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in California are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Cal. Corp. Code § 191

(a) For the purposes of Chapter 21 (commencing with Section 2100), “transact intrastate business” means entering into repeated and successive transactions of its business in this state, other than interstate or foreign commerce.

(b) A foreign corporation shall not be considered to be transacting intrastate business merely because its subsidiary transacts intrastate business or merely because of its status as any one or more of the following:

A shareholder of a domestic corporation.
A shareholder of a foreign corporation transacting intrastate business.
A limited partner of a domestic limited partnership.
A limited partner of a foreign limited partnership transacting intrastate business.
A member or manager of a domestic limited liability company.
A member or manager of a foreign limited liability company transacting intrastate business.

(c) Without excluding other activities that may not constitute transacting intrastate business, a foreign corporation shall not be considered to be transacting intrastate business within the meaning of subdivision (a) solely by reason of carrying on in this state any one or more of the following activities:

Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement thereof or the settlement of claims or disputes.
Holding meetings of its board or shareholders or carrying on other activities concerning its internal affairs.
Maintaining bank accounts.
Maintaining offices or agencies for the transfer, exchange, and registration of its securities or depositaries with relation to its securities.
Effecting sales through independent contractors.
Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where those orders require acceptance outside this state before becoming binding contracts.
Creating evidences of debt or mortgages, liens or security interests on real or personal property.
Conducting an isolated transaction completed within a period of 180 days and not in the course of a number of repeated transactions of like nature.

(d) Without excluding other activities that may not constitute transacting intrastate business, any foreign lending institution, including, but not limited to: any foreign banking corporation, any foreign corporation all of the capital stock of which is owned by one or more foreign banking corporations, any foreign savings and loan association, any foreign insurance company or any foreign corporation or association authorized by its charter to invest in loans secured by real and personal property, whether organized under the laws of the United States or of any other state, district or territory of the United States, shall not be considered to be doing, transacting or engaging in business in this state solely by reason of engaging in
any or all of the following activities either on its own behalf or as a trustee of a pension plan, employee profit sharing or retirement plan, testamentary or inter vivos trust, or in any other fiduciary capacity:

The acquisition by purchase, by contract to purchase, by making of advance commitments to purchase or by assignment of loans, secured or unsecured, or any interest therein, if those activities are carried on from outside this state by the lending institution.
The making by an officer or employee of physical inspections and appraisals of real or personal property securing or proposed to secure any loan, if the officer or employee making any physical inspection or appraisal is not a resident of and does not maintain a place of business for that purpose in this state.
The ownership of any loans and the enforcement of any loans by trustee’s sale, judicial process or deed in lieu of foreclosure or otherwise.
The modification, renewal, extension, transfer or sale of loans or the acceptance of additional or substitute security therefor or the full or partial release of the security therefor or the acceptance of substitute or additional obligors thereon, if the activities are carried on from outside this state by the lending institution.
The engaging by contractual arrangement of a corporation, firm or association, qualified to do business in this state, that is not a subsidiary or parent of the lending institution and that is not under common management with the lending institution, to make collections and to service loans in any manner whatsoever, including the payment of ground rents, taxes, assessments, insurance, and the like and the making, on behalf of the lending institution, of physical inspections and appraisals of real or personal property securing any loans or proposed to secure any loans, and the performance of any such engagement.
The acquisition of title to the real or personal property covered by any mortgage, deed of trust or other security instrument by trustee’s sale, judicial sale, foreclosure or deed in lieu of foreclosure, or for the purpose of transferring title to any federal agency or instrumentality as the insurer or guarantor of any loan, and the retention of title to any real or personal property so acquired pending the orderly sale or other disposition thereof.
The engaging in activities necessary or appropriate to carry out any of the foregoing activities. Nothing contained in this subdivision shall be construed to permit any foreign banking corporation to maintain an office in this state otherwise than as provided by the laws of this state or to limit the powers conferred upon any foreign banking corporation as set forth in the laws of this state or to permit any foreign lending institution to maintain an office in this state except as otherwise permitted under the laws of this state.

Penalties of Not Registering a Foreign LLC

Cal. Corp. Code § 2203

(a) Any foreign corporation which transacts intrastate business and which does not hold a valid certificate from the
Secretary of State may be subject to a penalty of twenty dollars ($20) for each day that unauthorized intrastate business is transacted; and the foreign corporation, by transacting unauthorized intrastate business, shall be deemed to consent to the jurisdiction of the courts of California in any civil action arising in this state in which the corporation is named a party defendant.

(b) The penalty established by subdivision (a) of this section shall be assessed according to the number of days it is found that the corporation has been willfully doing unauthorized intrastate business. Prosecution under this section may be brought, and the money penalty recovered thereby shall be paid, in the manner provided by Section 2258 for a prosecution brought under that section. The amount of the penalty assessed shall be determined by the court based upon the circumstances, including the size of the corporation and the willfulness of the violation.

(c) A foreign corporation subject to the provisions of Chapter 21 (commencing with Section 2100) which transacts intrastate business without complying with Section 2105 shall not maintain any action or proceeding upon any intrastate business so transacted in any court of this state, commenced prior to compliance with Section 2105, until it has complied with the provisions thereof and has paid to the Secretary of State a penalty of two hundred fifty dollars ($250) in addition to the fees due for filing the statement and designation required by Section 2105 and has filed with the clerk of the court in which the action is pending receipts showing the payment of the fees and penalty and all franchise taxes and any other taxes on business or property in this state that should have been paid for the period during which it transacted intrastate business.

Cal. Corp. Code § 2258

Any foreign corporation subject to the provisions of Chapter 21 which transacts intrastate business without complying therewith is guilty of a misdemeanor, punishable by fine of not less than five hundred dollars ($500) nor more than one thousand dollars ($1,000), to be recovered in any court of competent jurisdiction. Prosecution under this section may be brought by the Attorney General or by any district attorney. If brought by the latter, one-half of the fine collected shall be paid to the treasurer of the county in which the conviction was had and one-half to the State Treasurer. If brought by the Attorney General the entire amount of fine collected shall be paid to the State Treasurer to the credit of the General Fund of the state.

Cal. Corp. Code § 2259

Any person who transacts intrastate business on behalf of a foreign corporation which is not authorized to transact such business in this state, knowing that it is not so authorized, is guilty of a misdemeanor punishable by fine of not less than fifty dollars ($50) nor more than six hundred dollars ($600).

Overall Summary for Colorado

There are no statutes defining what is “transacting business” in Colorado, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Colorado are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Colo. Rev. Stat. § 7-90-801. Authority to transact business or conduct activities required.

(1) A foreign entity shall not transact business or conduct activities in this state except in compliance with this part 8 and not until its statement of foreign entity authority is filed in the records of the secretary of state. Notwithstanding the foregoing, this part 8 shall not apply to foreign general partnerships that are not foreign limited liability partnerships and shall not apply to foreign unincorporated nonprofit associations. To the extent that a provision of this part 8 is inconsistent with another statute of this state in its application to a foreign entity, such other statute, and not such provision of this part 8, shall apply.

(2) A foreign entity shall not be considered to be transacting business or conducting activities in this state within the meaning of subsection (1) of this section by reason of carrying on in this state any one or more of the following activities:

(3) The list of activities in subsection (2) of this section is not exhaustive.

(4) Nothing in this section shall limit or affect the right to subject a foreign entity that does not, or is not required to, have authority to transact business or conduct activities in this state to the jurisdiction of the courts of this state or to serve upon any foreign entity any process, notice, or demand required or permitted by law to be served upon an entity pursuant to part 7 of this article or section 13-1-124 and 13-1-125, C.R.S., or any other provision of law or pursuant to the applicable rules of civil procedure.

(5) A foreign nonprofit entity shall be considered to be transacting business or conducting activities in this state if it is required to file a registration statement with the secretary of state pursuant to section 6-16-104, C.R.S.

Penalties of Not Registering a Foreign LLC

Colo. Rev. Stat. § 7-90-802. Consequences of transacting business or conducting activities without authority.

(1)

(2) A foreign entity that transacts business or conducts activities in this state without being authorized to do so shall be liable to this state in an amount equal to the fee as prescribed by the secretary of state from time to time, not to exceed one hundred dollars for each calendar year or part of a calendar year during which it transacted business or conducted activities in this state without being authorized to do so, plus all penalties imposed by this state pursuant to subsection (3) of this section for failure to pay such fees. No statement of foreign entity authority shall be filed until payment of the amounts due under this subsection (2) and subsection (3) of this section is made.

(3) A foreign entity that transacts business or conducts activities in this state without having a statement of foreign entity authority on file in the records of the secretary of state shall be subject to a civil penalty, payable to this state, not to exceed five thousand dollars.

(4) The amounts due to this state under the provisions of subsection (2) of this section and the civil penalties set forth in subsection (3) of this section may be recovered in an action brought by the attorney general in the district court in and for the city and county of Denver. Upon a finding by the court that a foreign entity or any of its managers or agents on its behalf has transacted business or conducted activities in this state in violation of this part 8, the court may issue, in addition to or in lieu of the imposition of a civil penalty, an injunction restraining the further transaction of business or conducting of activities by the foreign entity and the managers and agents, and the further exercise of any rights and privileges of an entity in this state until all amounts plus any interest and court costs that the court may assess have been paid, and until the foreign entity has otherwise complied with this part 8.

(5) Notwithstanding subsection (1) of this section, the transaction of business or conducting of activities in this state by a foreign entity without having a statement of foreign entity authority on file in the records of the secretary of state does not impair the validity of the acts of the foreign entity or prevent it from defending any proceeding in this state.

Overall Summary for Connecticut

There are no statutes defining what is “transacting business” in Connecticut, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Connecticut are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Conn. Gen. Stat. § 33-920. Authority to transact business required.

(a) A foreign corporation, other than an insurance, surety or indemnity company, may not transact business in this state until it obtains a certificate of authority from the Secretary of the State. No foreign corporation engaged in the business of a telegraph company, gas, electric, electric distribution or water company, or cemetery corporation, or of any company requiring the right to take and condemn lands or to occupy the public highways of this state, and no foreign telephone company, shall transact in this state the business authorized by its certificate of incorporation or by the laws of the state under which it was organized, unless empowered so to do by some general or special act of this state, except for the purpose of carrying out and renewing contracts existing upon August 1, 1903. No insurance, surety or indemnity company shall transact business in this state until it has procured a license from the Insurance Commissioner in accordance with the provisions of section 38a-41.

(b) The following activities, among others, do not constitute transacting business within the meaning of subsection (a) of this section:

Maintaining, defending or settling any proceeding;
holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
maintaining bank accounts;
maintaining offices or agencies for the transfer, exchange and registration of the corporation’s own securities or maintaining trustees or depositaries with respect to those securities;
selling through independent contractors;
soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
creating or acquiring indebtedness, mortgages and security interests in real or personal property;
securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
owning, without more, real or personal property;
conducting an isolated transaction that is completed within thirty days and that is not one in the course of repeated transactions of a like nature;
transacting business in interstate commerce.

Penalties of Not Registering a Foreign LLC

Conn. Gen. Stat. § 33-921. Consequences of transacting business without authority

(a) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(d) A foreign corporation is liable to this state, for the years or parts thereof during which it transacted business in this state without a certificate of authority, in an amount equal to (1) all fees and taxes which would have been imposed by law upon such corporation had it duly applied for and received such certificate of authority to transact business in this state and (2) all interest and penalties imposed by law for failure to pay such fees and taxes. A foreign corporation is further liable to this state, for each month or part thereof during which it transacted business without a certificate of authority, in an amount equal to one hundred sixty-five dollars, except that a foreign corporation which has obtained a certificate of authority not later than ninety days after it has commenced transacting business in this state shall not be liable for such monthly penalty. Such fees and penalties may be levied by the Secretary of the State. The Attorney General shall bring such action as he may deem necessary to recover any amounts due the state under the provisions of this subsection including an action to restrain a foreign corporation against which fees and penalties have been imposed pursuant to this subsection from transacting business in this state until such time as such fees and penalties have been paid.

(e) Notwithstanding subsections (a) and (b) of this section, the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.

Overall Summary for Delaware

There are no statutes defining what is or is not “transacting business” in Delaware, although the penalties for transacting business without registering are somewhat severe: Cannot bring a lawsuit in the state, fines, although your contracts are enforceable.

Penalties of Not Registering a Foreign LLC

Del. Code Ann. tit. 8, § 378 Penalties for noncompliance.

Any foreign corporation doing business of any kind in this State without first having complied with any section of this subchapter applicable to it, shall be fined not less than $200 nor more than $500 for each such offense. Any agent of any foreign corporation that shall do any business in this State for any foreign corporation before the foreign corporation has complied with any section of this subchapter applicable to it, shall be fined not less than $100 nor more than $500 for each such offense.

Del. Code Ann. tit. 8, § 383 Actions by and against unqualified foreign corporations.

(a) A foreign corporation which is required to comply with §§ 371 and 372 of this title and which has done business in this State without authority shall not maintain any action or special proceeding in this State unless and until such corporation has been authorized to do business in this State and has paid to the State all fees, penalties and franchise taxes for the years or parts thereof during which it did business in this State without authority. This prohibition shall not apply to any successor in interest of such foreign corporation.

(b) The failure of a foreign corporation to obtain authority to do business in this State shall not impair the validity of any contract or act of the foreign corporation or the right of any other party to the contract to maintain any action or special proceeding thereon, and shall not prevent the foreign corporation from defending any action or special proceeding in this State.

Del. Code Ann. tit. 8, § 384 Foreign corporations doing business without having qualified; injunctions.

The Court of Chancery shall have jurisdiction to enjoin any foreign corporation, or any agent thereof, from transacting any business in this State if such corporation has failed to comply with any section of this subchapter applicable to it or if such corporation has secured a certificate of the Secretary of State under § 371 of this title on the basis of false or misleading representations. The Attorney General shall, upon the Attorney General’s own motion or upon the relation of proper parties, proceed for this purpose by complaint in any county in which such corporation is doing business.

Overall Summary for District of Columbia

There are no statutes defining what is “transacting business” in District of Columbia, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in District of Columbia are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

D.C.C. § 29-105.02 Registration to do business in the District.

(a)Without excluding other activities that do not have the intra-District presence necessary to constitute doing business in the District under this title, a foreign filing entity or foreign limited liability partnership shall not be considered to be doing business in the District under this title solely by reason of carrying on in the District any one or more of the following activities:

Maintaining, defending, mediating, arbitrating, or settling an action or proceeding;
Carrying on any activity concerning its internal affairs, including holding meetings of its interest holders or governors;
Maintaining accounts in financial institutions;
Maintaining offices or agencies for the transfer, exchange, and registration of interests of the entity or maintaining trustees or depositories with respect to those interests;
Selling through independent contractors;
Soliciting or obtaining orders by any means if the orders require acceptance outside the District before they become contracts;
Creating or acquiring indebtedness, mortgages, or security interests in property;
Securing or collecting debts or enforcing mortgages or other security interests in property securing the debts and holding, protecting, or maintaining property so acquired;
Conducting an isolated transaction that is not in the course of similar transactions; and
Doing business in interstate commerce.

(b) This section shall not apply in determining the contacts or activities that may subject a foreign filing entity or foreign limited liability partnership to service of process, taxation, or regulation under law of the District other than this title.

(c) A person does not do business in the District solely by being an interest holder or governor of a foreign entity that does business in the District.

Penalties of Not Registering a Foreign LLC

D.C.C. § 29-105.02— Registration to do business in the District.

(a) A foreign filing entity or foreign limited liability partnership shall not do business in the District until it registers with the Mayor under this chapter.

(b) A foreign filing entity or foreign limited liability partnership doing business in the District may not maintain an action or proceeding in the District unless it is registered to do business in the District.

(c) The failure of a foreign filing entity or foreign limited liability partnership to register to do business in the District shall not impair the validity of a contract or act of the foreign filing entity or foreign limited liability partnership or preclude it from defending an action or proceeding in the District.

(d) The liability of an interest holder or governor of a foreign filing entity or of a partner of a foreign limited liability partnership shall be governed by the laws of its jurisdiction of formation. Any limitation on that liability shall be not waived shall [sic] solely because the foreign filing entity or foreign limited liability partnership does business in the District without registering.

(e) Section 29-105.01(a) and (b) shall apply even if a foreign entity fails to register under this chapter.

(f) A foreign filing entity that does business in the District without being registered under § 29-105.03 shall be liable for all fees, penalties, and other charges for which the entity would have been liable if it had registered and had filed all reports required by this chapter for the period during which it did business in the District. The Attorney General for the District of Columbia may bring an action in the Superior Court of the District of Columbia to recover these fees, penalties, and other charges. A foreign entity shall not be registered under this chapter until it has paid these fees, penalties, and other charges.

Overall Summary for Florida

There are no statutes defining what is “transacting business” in Florida, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Florida are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Fla. Stat. Ann. § 607.1501 Authority of foreign corporation to transact business required.

(2) The following activities, among others, do not constitute transacting business within the meaning of subsection (1):

(3) The list of activities in subsection (2) is not exhaustive.

(4) This section has no application to the question of whether any foreign corporation is subject to service of process and suit in this state under any law of this state.

Penalties of Not Registering a Foreign LLC

Fla. Stat. Ann. § 607.1502 Consequences of transacting business without authority.

(1) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(2) The successor to a foreign corporation that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this state until the foreign corporation or its successor obtains a certificate of authority.

(3) A court may stay a proceeding commenced by a foreign corporation or its successor or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.

(4) A foreign corporation which transacts business in this state without authority to do so shall be liable to this state for the years or parts thereof during which it transacted business in this state without authority in an amount equal to all fees and taxes which would have been imposed by this act upon such corporation had it duly applied for and received authority to transact business in this state as required by this act. In addition to the payments thus prescribed, such corporation shall be liable for a civil penalty of not less than $500 or more than $1,000 for each year or part thereof during which it transacts business in this state without a certificate of authority. The Department of State may collect all penalties due under this subsection and may bring an action in circuit court to recover all penalties and fees due and owing the state.

(5) Notwithstanding subsections (1) and (2), the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of any of its contracts, deeds, mortgages, security interests, or corporate acts or prevent it from defending any proceeding in this state.

Overall Summary for Georgia

There are no statutes defining what is “transacting business” in Georgia, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Georgia are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Ga. Code Ann. § 14-2-1501. Authority to transact business required

(a) A foreign corporation may not transact business in this state until it obtains a certificate of authority from the Secretary of State.

(b) The following activities, among others, do not constitute transacting business within the meaning of subsection (a) of this Code section:

Maintaining or defending any action or any administrative or arbitration proceeding or effecting the settlement thereof or the settlement of claims or disputes;
Holding meetings of its directors or shareholders or carrying on other activities concerning its internal affairs;
Maintaining bank accounts, share accounts in savings and loan associations, custodian or agency arrangements with a bank or trust company, or stock or bond brokerage accounts;
Maintaining offices or agencies for the transfer, exchange, and registration of its securities or appointing and maintaining trustees or depositories with respect to its securities;
Effecting sales through independent contractors;
Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where the orders require acceptance outside this state before becoming binding contracts and where the contracts do not involve any local performance other than delivery and installation;
Making loans or creating or acquiring evidences of debt, mortgages, or liens on real or personal property, or recording same;
Securing or collecting debts or enforcing any rights in property securing the same;
Owning, without more, real or personal property;
Conducting an isolated transaction not in the course of a number of repeated transactions of a like nature;
Effecting transactions in interstate or foreign commerce;
Serving as trustee, executor, administrator, or guardian, or in like fiduciary capacity, where permitted so to serve by the laws of this state;
Owning (directly or indirectly) an interest in or controlling (directly or indirectly) another entity organized under the laws of, or transacting business within, this state; or
Serving as a manager of a limited liability company organized under the laws of, or transacting business within, this state.

(d) This chapter shall not be deemed to establish a standard for activities which may subject a foreign corporation to taxation or to service of process under any of the laws of this state.

Penalties of Not Registering a Foreign LLC

Ga. Code Ann. § 14-2-1502 Consequences of transacting business without authority

(a) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(b) Each foreign corporation that has not obtained a certificate of authority within 30 calendar days after the first day on which it transacts business in this state shall be liable for the civil penalty set out in Code Section 14-2-122. Such civil penalty shall be in addition to other consequences set out in this Code section and shall be collected without discretion by the Secretary of State.

(c) The successor to a foreign corporation that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this state unless before the commencement of the proceeding the foreign corporation or its successor obtains a certificate of authority.

(d) Notwithstanding subsections (a), (b), and (c) of this Code section, the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.

Overall Summary for Hawaii

There are no statutes defining what is “transacting business” in Hawaii, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Hawaii are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Haw. Rev. Stat. § 414-431. Authority to transact business required.

(a) A foreign corporation may not transact business in this State until it obtains a certificate of authority from the department director.

(b) The following activities, among others, do not constitute transacting business within the meaning of subsection (a):

Maintaining, defending, or settling any proceeding;
Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
Maintaining bank accounts;
Maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or maintaining trustees or depositories with respect to those securities;
Selling through independent contractors;
Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this State before they become contracts;
Creating as borrower or lender, or acquiring, as borrower or lender, indebtedness, mortgages, and security interests in real or personal property;
Securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
Owning, without more, real or personal property;
Conducting an isolated transaction that is completed within thirty days and that is not one in the course of repeated transactions of a like nature; and
Transacting business in interstate commerce.

Penalties of Not Registering a Foreign LLC

Haw. Rev. Stat. Ann. § 414-432 Consequences of transacting business without authority.

(a) A foreign corporation transacting business in this State without a certificate of authority may not maintain a proceeding in any court in this State until it obtains a certificate of authority.

(b) The successor to a foreign corporation that transacted business in this State without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this State until the foreign corporation or its successor obtains a certificate of authority.

(d) A foreign corporation that transacts business in this State without a certificate of authority shall be liable to this State, for the years or parts thereof during which it transacted business in this State without a certificate of authority, in an amount equal to all fees that would have been imposed by this chapter upon the corporation had it duly applied for and received a certificate of authority to transact business in this State as required by this chapter and thereafter filed all reports required by this chapter, plus all penalties imposed by this chapter for failure to pay the fees.
The attorney general shall bring proceedings to recover all amounts due this State under this section.

(e) Notwithstanding subsections (a) and (b), the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this State. [L 2000, c 244, pt of §1]

Overall Summary for Idaho

There are no statutes defining what is “transacting business” in Idaho, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Idaho are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Idaho Code § 30-1-1501. AUTHORITY TO TRANSACT BUSINESS REQUIRED.

(1) A foreign corporation may not transact business in this state until it obtains a certificate of authority from the secretary of state.

(2) The following activities, among others, do not constitute transacting business within the meaning of subsection (1) of this section:

(3) The list of activities in subsection (2) of this section is not exhaustive.

Penalties of Not Registering a Foreign LLC

Idaho Code § 30-1-1502. Consequences of transacting business without authority.

(1) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(3) A court may stay a proceeding commenced by a foreign corporation, its successor, or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.

(4) A foreign corporation which transacts business in this state without a certificate of authority shall be liable to this state, for the years or parts thereof during which it transacted business in this state without a certificate of authority, in an amount equal to all fees which would have been imposed under this chapter upon such corporation had it duly applied for and received a certificate of authority to transact business in this state as required by this chapter and thereafter filed all reports required by this chapter, plus all penalties imposed under this chapter for failure to pay such fees. The attorney general may collect all penalties due under this subsection.

(5) Notwithstanding subsections (1) and (2) of this section, the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.

Overall Summary for Illinois

There are no statutes defining what is “transacting business” in Illinois, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Illinois are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

805 ILCS 5/13.75 Activities that do not constitute transacting business.

Without excluding other activities that may not constitute doing business in this State, a foreign corporation shall not be considered to be transacting business in this State, for purposes of this Article 13, by reason of carrying on in this State any one or more of the following activities:

maintaining, defending, or settling any proceeding;
holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
maintaining bank accounts;
maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or maintaining trustees or depositaries with respect to those securities;
selling through independent contractors;
soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if orders require acceptance outside this State before they become contracts;
(blank);
(blank);
owning, without more, real or personal property;
conducting an isolated transaction that is completed within 120 days and that is not one in the course of repeated transactions of a like nature; or
having a corporate officer or director who is a resident of this State.

Penalties of Not Registering a Foreign LLC

805 ILCS 5/13.70 Transacting business without authority.

(a) No foreign corporation transacting business in this State without authority to do so is permitted to maintain a civil action in any court of this State, until the corporation obtains that authority. Nor shall a civil action be maintained in any court of this State by any successor or assignee of the corporation on any right, claim or demand arising out of the transaction of business by the corporation in this State, until authority to transact business in this State is obtained by the corporation or by a corporation that has acquired all or substantially all of its assets.

(b) The failure of a foreign corporation to obtain authority to transact business in this State does not impair the validity of any contract or act of the corporation, and does not prevent the corporation from defending any action in any court of this State.

(c) A foreign corporation that transacts business in this State without authority is liable to this State, for the years or parts thereof during which it transacted business in this State without authority, in an amount equal to all fees, franchise taxes, penalties and other charges that would have been imposed by this Act upon the corporation had it duly applied for and received authority to transact business in this State as required by this Act, but failed to pay the franchise taxes that would have been computed thereon, and thereafter filed all reports required by this Act; and, if a corporation fails to file an application for authority within 60 days after it commences business in this State, in addition thereto it is liable for a penalty of either 10% of the filing fee, license fee and franchise taxes or $200 plus $5.00 for each month or fraction thereof in which it has continued to transact business in this State without authority therefor, whichever penalty is greater. The Attorney General shall bring proceedings to recover all amounts due this State under this Section.

(d) The Attorney General shall bring an action to restrain a foreign corporation from transacting business in this State, if the authority of the foreign corporation to transact business has been revoked under subsection (m) of Section 13.50 of this Act.

Overall Summary for Indiana

There are no statutes defining what is “transacting business” in Indiana, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Indiana are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Ind. Code Ann. § 23-1-49-1 Necessity of certificate of authority; transacting business

Sec. 1. (a) A foreign corporation may not transact business in Indiana until it obtains a certificate of authority from the secretary of state. However, this requirement does not apply to the following:

Banks.
Savings banks.
Savings associations.
Corporate fiduciaries.
Credit unions.
Industrial loan and investment companies.
Surety companies.
Trust companies.
Safe deposit companies.
Railroad corporations.
Insurance companies.
Building and loan associations.

(b) The following activities, among others, do not constitute transacting business within the meaning of subsection (a) or within the meaning of IC 27-1-17-1 or IC 28-1-22-1:

Maintaining, defending, or settling any proceeding.
Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs.
Maintaining bank accounts.
Maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or maintaining trustees or depositaries with respect to those securities.
Selling through independent contractors.
Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside Indiana before they become contracts.
Making loans or otherwise creating or acquiring indebtedness, mortgages, and security interests in real or personal property.
Securing or collecting debts or enforcing mortgages and security interests in property securing the debts.
Owning, without more, real or personal property.
Conducting an isolated transaction that is completed within thirty (30) days and that is not one in the course of repeated transactions of a like nature.
Transacting business in interstate commerce.

Penalties of Not Registering a Foreign LLC

Ind. Code Ann. § 23-1-49-2

(a) A foreign limited liability company transacting business in Indiana without a certificate of authority may not maintain a court proceeding in Indiana until it obtains a certificate of authority.

(b) The successor to a foreign limited liability company that transacted business in Indiana without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a court proceeding in Indiana based on that cause of action until the foreign limited liability company or its successor obtains a certificate of authority.

(c) A court may stay a proceeding commenced by a foreign limited liability company or its successor or assignee until the court determines whether the foreign limited liability company or its successor or assignee requires a certificate of authority. If the court determines that a certificate of authority is needed, the court may stay the proceeding until the foreign limited liability company or its successor or assignee obtains the certificate.

(d) A foreign limited liability company is liable for a civil penalty of not more than ten thousand dollars ($10,000) if it transacts business in Indiana without a certificate of authority. The attorney general may collect all penalties due under this subsection.

(e) Notwithstanding subsections (a) and (b), the failure of a foreign limited liability company to obtain a certificate of authority does not impair the validity of its acts or prevent it from defending any proceeding in Indiana.

Overall Summary for Iowa

There are no statutes defining what is “transacting business” in Iowa, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Iowa are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Iowa Code Ann. § 490.1501. AUTHORITY TO TRANSACT BUSINESS REQUIRED.

1. A foreign corporation shall not transact business in this state until it obtains a certificate of authority from the secretary of state.

2. The following activities, among others, do not constitute transacting business within the meaning of subsection 1:

3. The list of activities in subsection 2 is not exhaustive.

Penalties of Not Registering a Foreign LLC

Iowa Code Ann. § 490.1502. CONSEQUENCES OF TRANSACTING BUSINESS WITHOUT AUTHORITY.

1. A foreign corporation transacting business in this state without a certificate of authority shall not maintain a proceeding in any court in this state until it obtains a certificate of authority.

2. The successor to a foreign corporation that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business shall not maintain a proceeding based on that cause of action in any court in this state until the foreign corporation or its successor obtains a certificate of authority.

3. A court may stay a proceeding commenced by a foreign corporation, its successor, or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.

4. A foreign corporation is liable for a civil penalty of not to exceed a total of one thousand dollars if it transacts business in this state without a certificate of authority. The attorney general may collect all penalties due under this subsection.

5. Notwithstanding subsections 1 and 2, the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.

Overall Summary for Kansas

There are no statutes defining what is “transacting business” in Kansas, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Kansas are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Kan. Stat. Ann. § 17-7307. Actions by and against unqualified foreign corporations.

(a) Activities of a foreign covered entity which do not constitute doing business within the meaning of K.S.A. 2015 Supp. 17-7931, and amendments thereto, include:

Maintaining, defending or settling an action or proceeding;
holding meetings or carrying on any other activity concerning its internal affairs;
maintaining bank accounts;
maintaining offices or agencies for the transfer, exchange or registration of the covered entity’s own securities or maintaining trustees or depositories with respect to those securities;
selling through independent contractors;
soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
selling, by contract consummated outside the state of Kansas, and agreeing, by the contract, to deliver into the state of Kansas machinery, plants or equipment, the construction, erection or installation of which within the state requires the supervision of technical engineers or skilled employees performing services not generally available, and as part of the contract of sale agreeing to furnish such services, and such services only, to the vendee at the time of construction, erection or installation;
creating, as borrower or lender, or acquiring indebtedness with or without a mortgage or other security interest in property;
securing or collecting debts or foreclosing mortgages or other security interests in property securing the debts, and holding, protecting and maintaining property so acquired;
conducting an isolated transaction that is completed within 30 days and is not one in the course of similar transactions of like nature; and
transacting business in interstate commerce.

(b) A person shall not be deemed to be doing business in the state of Kansas solely by reason of being a member, stockholder, limited partner or governor of a domestic covered entity or a foreign covered entity.

(c) This section does not apply in determining whether a foreign covered entity is subject to service of process, taxation or regulation under any other law of this state.

Penalties of Not Registering a Foreign LLC

Kan. Stat. Ann. § 17-7307. Actions by and against unqualified foreign corporations.

(a) A foreign corporation which is required to comply with the provisions of K.S.A. 17-7301 and 17-7302 and which has done business in this state without authority shall not maintain any action or special proceeding in this state, unless and until such corporation has been authorized to do business in this state and has paid to the state all taxes, fees and penalties which would have been due for the years or parts thereof during which it did business in this state without authority. This prohibition shall not apply to any successor in interest of any such foreign corporation.

(b) The failure of a foreign corporation to obtain authority to do business in this state shall not impair the validity of any contract or act of the foreign corporation or the right of any other party to the contract to maintain any action or special proceeding thereon, and shall not prevent the foreign corporation from defending any action or special proceeding in this state.

(c) Any person having a cause of action against any foreign corporation, whether or not such corporation is qualified to do business in this state, which cause of action arose in Kansas out of such corporation doing business in Kansas, or arose while such corporation was doing business in Kansas, may file suit against the corporation in the proper court of a county in which there is proper venue. Service of process in any action shall be made in the manner prescribed by K.S.A. 60-304.

Kan. Stat. Ann. § 17-7308. Enjoining foreign corporation from transacting business in state for violation of code.

The district court shall have jurisdiction to enjoin any foreign corporation, or any agent thereof, from transacting any business in this state if such corporation has failed to comply with any section of this act applicable to it, or if such corporation has secured a certificate of the secretary of state under K.S.A. 17-7301 on the basis of false or misleading representations. The attorney general, upon his own motion or upon the relation of proper parties, shall proceed for this purpose by an action commenced in any county in which such corporation is doing business.

Overall Summary for Kentucky

There are no statutes defining what is “transacting business” in Kentucky, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Kentucky are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

KY. REV. STAT. ANN. § 362.2-903 Activities not constituting transacting business.

(1) Activities of a foreign limited partnership which do not constitute transacting business in this Commonwealth within the meaning of KRS 362.2-901 to 362.2-908 include:

(2) For purposes of KRS 362.2-901 to 362.2-908, the ownership in this Commonwealth of income-producing real property or tangible personal property, other than property excluded under subsection (1) of this section, constitutes transacting business in this Commonwealth. (3) This section does not apply in determining the contacts or activities that may subject a foreign limited partnership to service of process, taxation, or regulation under any other law of this Commonwealth.

Penalties of Not Registering a Foreign LLC

KY. REV. STAT. ANN. § 14A.9-020 Consequences of transacting business without authority.

(1) A foreign entity transacting business in this Commonwealth without a certificate of authority may not maintain a proceeding in any court in this Commonwealth until it obtains a certificate of authority.

(2) Neither the successor to a foreign entity that transacted business in this Commonwealth without a certificate of authority nor the assignee of a cause of action arising out of that business shall maintain a proceeding based on that cause of action in any court in this Commonwealth until the foreign entity or the assignee of the cause of action obtains a certificate of authority.

(3) A court may stay a proceeding commenced by a foreign entity, its successor, or assignee until it determines whether the foreign entity, its successor, or assignee requires a certificate of authority. If it so determines, the court may further stay the proceeding until the foreign entity, its successor, or assignee obtains the certificate.

(4) A foreign entity is liable for a civil penalty of two dollars ($2) for each day it transacts business in this Commonwealth without a certificate of authority. The Secretary of State may collect all penalties due under this subsection.

(5) Notwithstanding subsections (1) and (2) of this section, the failure of a foreign entity to obtain a certificate of authority shall not impair the validity of the acts of the foreign entity or prevent it from defending any proceeding in this Commonwealth.

Overall Summary for Louisiana

There are no statutes defining what is “transacting business” in Louisiana, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Louisiana are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

LA Rev Stat § 302. Acts not considered transacting business.

Without excluding other activities which may not constitute transacting business in this state, a foreign corporation or a business association shall not be considered to be transacting business in this state, for the purpose of being required to procure a certificate of authority pursuant to R.S. 12:301, by reason of carrying on in this state any one or more of the following activities:

Acquiring or making loans, or participations or interests therein, secured, directly or by assignment or pledge of obligations secured by such mortgages, by mortgages on immovable property, or making such loans through, or in participation with, national or state banks having their banking offices in this state or other Louisiana concerns, or modifying, renewing, extending or transferring such loans or security, or accepting substitute or additional obligors thereon.
Maintaining depository or pledge-holder agreements or arrangements with national or state banks having their banking offices in this state, in connection with the taking of assignments or pledges of such loans or security.
Making, collecting and servicing such loans or security through Louisiana concerns engaged in the business of servicing and loans.
Acquiring immovable property securing such loans under foreclosure sale or in lieu of foreclosure, and managing, operating, leasing, selling or otherwise disposing of such property.
Inspecting or appraising immovable property as direct or indirect security for such loans, and negotiating for such loans.
Owning, modifying, renewing, extending, transferring or foreclosing on such loans, mortgages or mortgage notes, or accepting substitute or additional obligors thereon.

L. No foreign corporation or business association of the type described in Subsection K of this section and confining its business operations in Louisiana to the activities described in said Subsection K shall be required to pay any tax or fee required to be paid by foreign corporations or business associations under any law of this state; such exemption, however, shall not include ad valorem taxes assessed against any real property which such foreign corporations or business associations may own in this state. Nothing in this section shall be construed to permit any foreign corporation or business association to do business in violation of the small loan law of this state, nor of the laws of Louisiana governing the organization and operation of homesteads, building and loan associations or societies, or savings and loan associations or societies.

Penalties of Not Registering a Foreign LLC

LA Rev Stat § 12:314 Transacting business without authority.

A. No foreign corporation transacting business in this state shall be permitted to present any judicial demand before any court of this state unless it has been authorized to transact such business, if required by, and as provided in, this Chapter. The burden of proof shall rest upon the corporation to establish that it has been so authorized, and the only legal evidence thereof shall be the certificate of the secretary of state or a duly authenticated copy thereof.

B. The failure of a foreign corporation to obtain a certificate of authority to transact business in this state shall not impair the validity of any contract or act of such corporation, and shall not prevent such corporation from defending any action, suit or proceeding in any court of this state.

C. A foreign corporation which transacts business in this state without a certificate of authority shall be liable to this state, for the years or parts thereof during which it transacted business in this state without a certificate of authority, in an amount equal to all fees and taxes which would have been imposed by law upon such corporation, had it duly applied for and received a certificate of authority to transact business in this state as required by this Chapter, and had thereafter filed all reports required by this Chapter, plus all penalties imposed by this Chapter for failure to pay such fees and franchise taxes. The Attorney General shall bring proceedings to recover all amounts due this state under the provisions of this section.

Overall Summary for Maine

There are no statutes defining what is “transacting business” in Maine, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Maine are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Me. Rev. Stat. Ann. tit. 13-C, §1501. Authority to transact business required.

2. Transacting business. Activities that do not constitute transacting business within the meaning of subsection 1 include but are not limited to:

Penalties of Not Registering a Foreign LLC

Me. Rev. Stat. Ann. tit. 13-C, §1502. Consequences of transacting business without authority.

1. No court proceeding. A foreign corporation transacting business in this State without authority may not maintain a proceeding in any court in this State until it files an application for authority and pays the applicable filing fee.

2. Successor; assignee of cause of action. The successor to a foreign corporation that transacted business in this State without authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this State until the foreign corporation or its successor files an application for authority.

3. Stay proceeding. A court may stay a proceeding commenced by a foreign corporation, its successor or assignee until the court determines whether the foreign corporation or its successor requires authorization. If the court so determines, the court may further stay the proceeding until the foreign corporation or its successor files an application for authority.

4. Civil penalty. A foreign corporation is liable for a civil penalty of $500 for each year, or portion thereof, it transacts business in this State without authority. The Attorney General may collect all penalties due under this subsection.

5. Validity of corporate acts. Notwithstanding subsections 1 and 2, the failure of a foreign corporation to file an application for authority does not impair the validity of its corporate acts, including contracts, or prevent it from defending any proceeding in this State.

Overall Summary for Maryland

There are no statutes defining what is “transacting business” in Maryland, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Maryland are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Md. Corp. & Ass’ns. Code Ann. § 7-103. Activities not considered intrastate business.

In addition to any other activities which may not constitute doing intrastate business in this State, for the purposes of this article, the following activities of a foreign corporation do not constitute doing intrastate business in this State:

Maintaining, defending, or settling an action, suit, claim, dispute, or administrative or arbitration proceeding;
Holding meetings of its directors or stockholders or carrying on other activities which concern its internal affairs;
Maintaining bank accounts;
Maintaining offices or agencies for the transfer, exchange, and registration of its securities;
Appointing and maintaining trustees or depositaries with respect to its securities;
Transacting business exclusively in interstate or foreign commerce; and
Conducting an isolated transaction not in the course of a number of similar transactions.

Penalties of Not Registering a Foreign LLC

Md. Corp. & Ass’ns. Code Ann. § 4A-1007

(a) If a foreign limited liability company is doing or has done any intrastate, interstate, or foreign business in this State without complying with the requirements of this subtitle, the foreign limited liability company and any person claiming under it may not maintain suit in any court of this State, unless the limited liability company shows to the satisfaction of the court that:

The foreign limited liability company or the person claiming under it has paid the penalty specified in subsection (d)(1) of this section; and

(b) The failure of a foreign limited liability company to register in this State does not impair the validity of a contract or act of the foreign limited liability company or prevent the foreign limited liability company from defending any action, suit, or proceeding in a court of this State.

(c) A foreign limited liability company, by doing business in this State without registration, appoints the Department as its agent for service of process with respect to causes of action arising out of doing business in this State.

(d)

(1)

(2) Each member of a foreign limited liability company that does intrastate, interstate, or foreign business in this State without registering, and each agent of the foreign limited liability company who transacts intrastate, interstate, or foreign business in this State for it is guilty of a misdemeanor and on conviction is subject to a fine of not more than $1,000.

Overall Summary for Massachusetts

There are no statutes defining what is “transacting business” in Massachusetts, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Massachusetts are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Mass. Gen. Laws Ann. ch. 156D, § 15.01 AUTHORITY TO TRANSACT BUSINESS REQUIRED.

(a) A foreign corporation that transacts business or has a usual place of business in the commonwealth shall deliver the certificate required by section 15.03 to the secretary of state for filing.

(b) The following activities, among others, do constitute transacting business within the meaning of subsection (a):

the ownership or leasing of real estate in the commonwealth;
engaging in the construction, alteration or repair of any structure, railway or road; or
engaging in any other activity requiring the performance of labor.

(c) The following activities, among others, without more, do not constitute transacting business within the meaning of subsection (a):

maintaining, defending, or settling any proceeding;
holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
maintaining bank accounts;
maintaining offices or agencies for the transfer, exchange, and registration of the corporations own securities or maintaining trustees or depositories with respect to those securities;
selling through independent contractors;
soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside the commonwealth before they become contracts;
no clause
no clause
conducting an isolated transaction that is not one in the course of repeated transactions of a like nature;
transacting business in interstate commerce; or
performing activities subject to regulation under chapter 167 or chapter 175, if the foreign corporation has complied with the applicable chapter.

(d) The list of activities in subsections (b) and (c) is not exhaustive.

Penalties of Not Registering a Foreign LLC

Mass. Gen. Laws Ann. ch. 156D, § 15.02 CONSEQUENCES OF TRANSACTING BUSINESS WITHOUT AUTHORITY.

(a) A foreign corporation transacting business in the commonwealth without delivering to the secretary of state for filing the certificate required by section 15.03 shall not maintain a proceeding in any court in the commonwealth until the certificate is delivered and filed.

(b) The successor to a foreign corporation that transacted business in the commonwealth without delivering to the secretary of state for filing the certificate required by section 15.03 and the assignee of a cause of action arising out of that business shall not maintain a proceeding based on that cause of action in any court in the commonwealth until the foreign corporation or its successor delivers the certificate and it is filed.

(c) A court may stay a proceeding commenced by a foreign corporation, its successor, or assignee until it determines whether the foreign corporation or its successor is required to deliver to the secretary of state for filing the certificate required by section 15.03. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor delivers the certificate and it is filed.

(d) A foreign corporation is liable to the commonwealth for the years or parts of years during which it transacted business in the commonwealth without delivering to the secretary of state for filing the certificate required by section 15.03, in an amount equal to (1) all late fees which would have been imposed by law had it duly delivered the certificate and (2) all interest and penalties imposed by law for failure to pay the fees. A foreign corporation is further liable to the commonwealth, for each month or part thereof during which it transacted business without delivering the certificate, in an amount determined by the secretary of state, which amount shall in no event exceed the amount established by the commissioner of administration under section 3B of chapter 7, except that a foreign corporation which has delivered such certificate shall not be liable for such monthly penalty for the first 10 days during which it transacted business without delivering such certificate. Such fees and penalties may be levied by the secretary of state. The attorney general may bring an action necessary to recover amounts due to the commonwealth under this subsection including an action to restrain a foreign corporation against which fees and penalties have been imposed pursuant to this subsection from transacting business in the commonwealth until the fees and penalties have been paid.

(e) Notwithstanding subsections (a) and (b), the failure of a foreign corporation to deliver to the secretary of state for filing the certificate required by section 15.03 shall not impair the validity of its corporate acts or prevent it from defending any proceeding in the commonwealth, or affect the validity of any contract entered into by the foreign corporation.

Select a state above to see more about that state’s relevant laws on the subject …

Overall Summary for Michigan

There are no statutes defining what is “transacting business” in Michigan, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Michigan are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Mich. Comp. Laws § 450.2012 Activities not constituting transaction of business; applicability of section.

Sec. 1012.

(1) Without excluding other activities which may not constitute transacting business in this state, a foreign corporation is not considered to be transacting business in this state, for the purposes of this act, solely because it is carrying on in this state any 1 or more of the following activities:

(2) This section does not apply in determining the contacts or activities which may subject a foreign corporation to service of process or taxation in this state or to regulation under any other act of this state.

Penalties of Not Registering a Foreign LLC

Mich. Comp. Laws §§ 450.2051; 450.2055

(1) A foreign limited liability company transacting business in this state without a certificate of authority shall not maintain an action, suit, or proceeding in a court of this state until it has obtained a certificate of authority. This prohibition applies to both of the following in addition to the foreign limited liability company:

(2) An action commenced by a foreign limited liability company having no certificate of authority shall not be dismissed if a certificate of authority is obtained before the order of dismissal. Any order of dismissal shall be without prejudice to the recommencement of the action, suit, or proceeding by the foreign limited liability company after it obtains a certificate of authority.

(3) The failure of a foreign limited liability company to obtain a certificate of authority to transact business in this state does not impair the validity of any contract or act of the foreign limited liability company or prevent the foreign limited liability company from defending any action, suit, or proceeding in a court of this state.

(4) A foreign limited liability company, by transacting business in this state without a certificate of authority, appoints the administrator as its agent for service of process with respect to a cause of action arising out of the transaction of business in this state.

(5) A foreign limited liability company that transacts business in this state without a certificate of authority is liable to the state for the years or parts of years during which it transacted business in this state without a certificate in an amount equal to all fees that would have been imposed under this act upon the foreign limited liability company had it obtained the certificate, filed all documents required by this act, and paid all penalties imposed by this act. The attorney general may bring proceedings to recover all amounts due the state under this section.

(6) A foreign limited liability company that transacts business in this state without a certificate of authority is subject to a civil penalty, payable to the state, of not less than $100.00 nor more than $1,000.00 for each calendar month, not more than 5 years prior to the imposition of the penalty, in which it has transacted business without the certificate. The penalty shall not exceed $10,000.00. Each manager, member, or authorized person who authorizes, directs, or participates in the transaction of business in this state on behalf of a foreign limited liability company that does not have a certificate is subject to a civil penalty, payable to the state, not to exceed $10,000.00.

(7) The civil penalties set forth in subsection (6) may be recovered in an action brought by the attorney general. Upon a finding by the court that a foreign limited liability company or any of its members, managers, or authorized persons have transacted business in this state in violation of this act, the court shall issue, in addition to the imposition of a civil penalty, an injunction restraining the further transaction of business by the foreign limited liability company and the further exercise of any rights and privileges in this state. The foreign limited liability company shall be enjoined from transacting business in this state until all civil penalties plus any interest and court costs that the court may assess have been paid and until the foreign limited liability company has obtained a certificate of authority to transact business.

(8) A member of a foreign limited liability company is not liable for the debts and obligations of the limited liability company solely by reason of the company’s having transacted business in this state without a valid certificate of authority.

Overall Summary for Minnesota

There are no statutes defining what is “transacting business” in Minnesota, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Minnesota are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Minn. Stat. Ann. § 303.03 FOREIGN CORPORATIONS MUST HAVE CERTIFICATE OF AUTHORITY.

No foreign corporation shall transact business in this state unless it holds a certificate of authority so to do; and no foreign corporation whose certificate of authority has been revoked or canceled pursuant to the provisions of this chapter shall be entitled to obtain a certificate of authority except in accordance with the provisions of section 303.19. This section does not establish standards for those activities that may subject a foreign corporation to taxation under section 290.015 and to the reporting requirements of section 290.371. Without excluding other activities which may not constitute transacting business in this state, and subject to the provisions of sections 5.25 and 543.19, a foreign corporation shall not be considered to be transacting business in this state for the purposes of this chapter solely by reason of carrying on in this state any one or more of the following activities:

Penalties of Not Registering a Foreign LLC

Minn. Stat. Ann. § 303.20 FOREIGN CORPORATION MAY NOT MAINTAIN ACTION UNLESS LICENSED.

No foreign corporation transacting business in this state without a certificate of authority shall be permitted to maintain an action in any court in this state until such corporation shall have obtained a certificate of authority; nor shall an action be maintained in any court by any successor or assignee of such corporation on any right, claim, or demand arising out of the transaction of business by such corporation in this state until a certificate of authority to transact business in this state shall have been obtained by such corporation or by a corporation which has acquired all, or substantially all, of its assets. If such assignee shall be a purchaser without actual notice of such violation by the corporation, recovery may be had to an amount not greater than the purchase price. This section shall not be construed to alter the rules applicable to a holder in due course of a negotiable instrument.

The failure of a foreign corporation to obtain a certificate of authority to transact business in this state does not impair the validity of any contract or act of such corporation, and shall not prevent such corporation from defending any action in any court of this state.

Any foreign corporation which transacts business in this state without a certificate of authority shall forfeit and pay to this state a penalty, not exceeding $1,000, and an additional penalty, not exceeding $100, for each month or fraction thereof during which it shall continue to transact business in this state without a certificate of authority therefor. Such penalties may be recovered in the district court of any county in which such foreign corporation has done business or has property or has a place of business, by an action, in the name of the state, brought by the attorney general.

Overall Summary for Mississippi

There are no statutes defining what is “transacting business” in Mississippi, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Mississippi are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

MS Code § 79-4-15.01 (2013)

(b) The following activities, among others, do not constitute transacting business within the meaning of subsection (a):

Maintaining, defending or settling any proceeding;
Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
Maintaining bank accounts;
Maintaining offices or agencies for the transfer, exchange and registration of the corporation’s own securities or maintaining trustees or depositories with respect to those securities;
Selling through independent contractors;
Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
Creating or acquiring indebtedness, mortgages and security interests in real or personal property;
Securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
Owning, without more, real or personal property;
Conducting an isolated transaction that is completed within thirty (30) days and that is not one in the course of repeated transactions of a like nature;
Transacting business in interstate commerce;
Being a shareholder in a corporation or a foreign corporation that transacts business in this state;
Being a limited partner of a limited partnership or foreign limited partnership that is transacting business in this state;
Being a member or manager of a limited liability company or foreign limited liability company that is transacting business in this state.

(d) A foreign corporation which is general partner of any general or limited partnership, which partnership is transacting business in this state, is hereby declared to be transacting business in this state.

Penalties of Not Registering a Foreign LLC

MS Code § 79-4-15.02 (2013)

(a) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(c) A court may stay a proceeding commenced by a foreign corporation, its successor or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.

(d) A foreign corporation is liable for a civil penalty of Ten Dollars ($ 10.00) for each day, but not to exceed a total of One Thousand Dollars ($ 1,000.00) for each year, it transacts business in this state without a certificate of authority. The Attorney General may collect all penalties due under this subsection.

(e) Notwithstanding subsections (a) and (b), the failure of a foreign corporation to obtain a certificate of authority shall not impair the validity of any contract, deed, mortgage, security interest, lien or act of such foreign corporation or prevent the foreign corporation from defending any action, suit or proceeding in any court of this state.

Overall Summary for Missouri

There are no statutes defining what is “transacting business” in Missouri, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Missouri are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Mo. Ann. Stat. § 351.572 AUTHORITY TO TRANSACT BUSINESS REQUIRED.

2. The following activities, among others, do not constitute transacting business within the meaning of subsection 1 of this section:

Maintaining, defending, or settling any proceeding;
Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
Maintaining bank accounts;
Maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or maintaining trustees or depositories with respect to those securities;
Creating or acquiring indebtedness, mortgages, and security interests in real or personal property;
Securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
Conducting an isolated transaction that is completed within thirty days and that is not one in the course of repeated transactions of a like nature;
Transacting business in interstate commerce.

3. The list of activities in subsection 2 of this section is not exhaustive.

Penalties of Not Registering a Foreign LLC

Mo. Ann. Stat. § 303.20 FOREIGN CORPORATION MAY NOT MAINTAIN ACTION UNLESS LICENSED.

Overall Summary for Montana

There are no statutes defining what is “transacting business” in Montana, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Montana are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Mont. Code Ann.§ 35-8-1001. Authority to transact business required.

(1) A foreign limited liability company may not transact business in this state until it obtains a certificate of authority from the secretary of state.

(2) The following activities, among others, do not constitute transacting business within the meaning of subsection (1):

(3) The list of activities in subsection (2) is not exhaustive.

(4) Except as provided in subsection (2), a foreign limited liability company is transacting business within the meaning of subsection (1) if it enters into a contract, including a contract entered into pursuant to Title 18, with the state of Montana, an agency of the state, or a political subdivision of the state and must apply for and receive a certificate of authority to transact business before entering into the contract. The secretary of state shall provide written notice to the contracting parties regarding the requirement that a foreign limited liability company obtain a certificate of authority. The foreign limited liability company must be allowed 30 days from the date of the notice to obtain the certificate of authority, and an existing contract may not be voided prior to the expiration of the 30 days. This subsection does not apply to goods or services prepared out of state for delivery or use in this state.

Penalties of Not Registering a Foreign LLC

Mont. Code Ann.§ 35-8-1002. Consequences of transacting business without authority.

(1) A foreign limited liability company transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(2) The successor to a foreign limited liability company that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this state until the foreign limited liability company or its successor obtains a certificate of authority.

(3) A court may stay a proceeding commenced by a foreign limited liability company or its successor or assignee until it determines whether the foreign corporation or its successor or assignee requires a certificate of authority. If it determines that a certificate is required, the court may further stay the proceeding until the foreign limited liability company or its successor obtains the certificate.

(4) A foreign limited liability company is liable for a civil penalty of $5 for each day, but not to exceed a total of $1,000 for each year, that it transacts business in this state without a certificate of authority. The attorney general may collect all penalties due under this subsection and deposit them to the general fund.

(5) Notwithstanding the provisions of subsections (1) and (2) and except as provided in subsection (6), the failure of a foreign limited liability company to obtain a certificate of authority does not impair the validity of its acts or prevent it from defending any proceeding in this state.

(6) A contract between the state of Montana, an agency of the state, or a political subdivision of the state and a foreign limited liability company that has failed to obtain a certificate of authority, as required under 35-8-1001, is voidable by the state, the contracting state agency, or the contracting political subdivision.

Overall Summary for Nebraska

There are no statutes defining what is “transacting business” in Nebraska, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Nebraska are: cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Neb. Rev. Stat. Ann. § 21-157. Activities not constituting transacting business.

(a) Activities of a foreign limited liability company which do not constitute transacting business in this state within the meaning of sections 21-155 to 21-163 include:

maintaining, defending, or settling an action or proceeding;
carrying on any activity concerning its internal affairs, including holding meetings of its members or managers;
maintaining accounts in financial institutions;
maintaining offices or agencies for the transfer, exchange, and registration of the company’s own securities or maintaining trustees or depositories with respect to those securities;
selling through independent contractors;
soliciting or obtaining orders, whether by mail or electronic means or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
creating or acquiring indebtedness, mortgages, or security interests in real or personal property;
securing or collecting debts or enforcing mortgages or other security interests in property securing the debts and holding, protecting, or maintaining property so acquired;
conducting an isolated transaction that is completed within thirty days and is not in the course of similar transactions; and
transacting business in interstate commerce.

(b) For purposes of sections 21-155 to 21-163, the ownership in this state of income-producing real property or tangible personal property, other than property excluded under subsection (a) of this section, constitutes transacting business in this state.

(c) This section does not apply in determining the contacts or activities that may subject a foreign limited liability company to service of process, taxation, or regulation under law of this state other than the Nebraska Uniform Limited Liability Company Act.

Penalties of Not Registering a Foreign LLC

Neb. Rev. Stat. Ann. § 21-162. Effect of failure to have certificate of authority.

(a) A foreign limited liability company transacting business in this state may not maintain an action or proceeding in this state unless it has a certificate of authority to transact business in this state.

(b) The failure of a foreign limited liability company to have a certificate of authority to transact business in this state does not impair the validity of a contract or act of the company or prevent the company from defending an action or proceeding in this state.

(c) A member or manager of a foreign limited liability company is not liable for the debts, obligations, or other liabilities of the company solely because the company transacted business in this state without a certificate of authority.

Overall Summary for Nevada

There are no statutes defining what is “transacting business” in Nevada, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Nevada are: fines, cannot bring a lawsuit in the state although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Nev. Rev. Stat. Ann. 80.015 Activities not constituting doing business.

1. For the purposes of this chapter, the following activities do not constitute doing business in this State:

2. The list of activities in subsection 1 is not exhaustive.

3. A person who is not doing business in this State within the meaning of this section need not qualify or comply with any provision of this chapter, chapter 645A, 645B or 645E of NRS or title 55 or 56 of NRS unless the person:

4. The fact that a person is not doing business in this State within the meaning of this section:

5. As used in this section and for the purposes of NRS 80.016, “deposits” means demand deposits, savings deposits and time deposits, as those terms are defined in chapter 657 of NRS.

Penalties of Not Registering a Foreign LLC

Nev. Rev. Stat. Ann. 80.055 Penalty for failure to comply with requirements for qualification; enforcement; regulations.

1. Every corporation which willfully fails or neglects to comply with the provisions of NRS 80.010 to 80.040, inclusive, is subject to a fine of not less than $1,000 but not more than $10,000, to be recovered in a court of competent jurisdiction.

2. Except as otherwise provided in subsection 3, every corporation which fails or neglects to comply with the provisions of NRS 80.010 to 80.040, inclusive, may not commence or maintain any action or proceeding in any court of this State until it has fully complied with the provisions of NRS 80.010 to 80.040, inclusive.

3. An action or proceeding may be commenced by such a corporation if an extraordinary remedy available pursuant to chapter 31 of NRS is all or part of the relief sought. Such an action or proceeding must be dismissed without prejudice if the corporation does not comply with the provisions of NRS 80.010 to 80.040, inclusive, within 45 days after the action or proceeding is commenced.

4. When the Secretary of State is advised that a corporation is doing business in contravention of NRS 80.010 to 80.040, inclusive, the Secretary of State may, as soon as practicable, refer the matter to the district attorney of the county where the corporation has its principal place of business or the Attorney General, or both, for a determination of whether to institute proceedings to recover any applicable fine provided for in this section. The district attorney of the county where the corporation has its principal place of business or the Attorney General may institute and prosecute the appropriate proceedings to recover the fine. If the district attorney or the Attorney General prevails in a proceeding to recover the fine described in subsection 1, the district attorney or the Attorney General is entitled to recover the costs of the proceeding, including, without limitation, the cost of any investigation and reasonable attorney’s fees.

5. In the course of an investigation of a violation of this section, the Secretary of State may require a corporation to answer any interrogatory submitted by the Secretary of State that will assist in the investigation.

6. The failure of a corporation to comply with the provisions of NRS 80.010 to 80.040, inclusive, does not impair the validity of any contract or act of the corporation, or prevent the corporation from defending any action, suit or proceeding in any court of this State.

7. The Secretary of State may adopt regulations to administer the provisions of this section.

Overall Summary for New Hampshire

There are no statutes defining what is “transacting business” in New Hampshire, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in New Hampshire are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

N.H. Rev. Stat. Ann. § 293-A:15.01 Authority to Transact Business Required.

(a) A foreign corporation may not transact business in this state until it obtains a certificate of authority from the secretary of state.

(b) The following activities, among others, do not constitute transacting business within the meaning of RSA 293-A:15.01(a):

maintaining, defending, or settling any proceeding;
holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
maintaining bank accounts;
maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or maintaining trustees or depositaries with respect to those securities;
selling through independent contractors;
soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
creating or acquiring indebtedness, mortgages, and security interests in real or personal property;
securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
owning, without more, real or personal property;
conducting an isolated transaction that is completed within 30 days and that is not one in the course of repeated transactions of a like nature; or
transacting business in interstate commerce.

(d) Nothing in this section shall be construed so as to preclude a determination that a foreign corporation is carrying on business activity within this state within the meaning of RSA 77-A:1, XII.

(e) Any so-called Massachusetts trust or business trust established by law of any other state, desiring to do business in this state, shall be deemed to be a foreign corporation and shall be required to register under and comply with the provisions of this subdivision.

Penalties of Not Registering a Foreign LLC

N.H. Rev. Stat. Ann. § 293-A:15.02 Consequences of Transacting Business Without Authority.

(a) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(d) A foreign corporation which transacts business in this state without a certificate of authority shall be liable to this state, for the years or parts of any years during which it transacted business in this state without a certificate of authority, in an amount equal to all fees which would have been imposed by this subdivision upon the corporation had it duly applied for and received a certificate of authority to transact business in this state as required by this subdivision and thereafter filed all required reports. The corporation shall also be liable for any penalties imposed by this subdivision for failure to pay such fees. The attorney general shall bring proceedings to recover all amounts due under the provisions of this section.

(e) Notwithstanding RSA 293-A:15.02(a) and (b), the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.

Overall Summary for New Jersey

There are no statutes defining what is “transacting business” in New Jersey, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in New Jersey are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

NJ Rev Stat § 14A:13-3 (2013). Admission of foreign corporation

(1) No foreign corporation shall have the right to transact business in this State until it shall have procured a certificate of authority so to do from the Secretary of State. A foreign corporation may be authorized to do in this State any business which may be done lawfully in this State by a domestic corporation, to the extent that it is authorized to do such business in the jurisdiction of its incorporation, but no other business.

(2) Without excluding other activities which may not constitute transacting business in this State, a foreign corporation shall not be considered to be transacting business in this State, for the purposes of this act, by reason of carrying on in this State any one or more of the following activities

(3) The specification in subsection 14A:13-3(2) does not establish a standard for activities which may subject a foreign corporation to service of process or taxation in this State.

Penalties of Not Registering a Foreign LLC

NJ Rev Stat § 14A:13-11 (2013). Transacting business without certificate of authority.

(1) No foreign corporation transacting business in this State without a certificate of authority shall maintain any action or proceeding in any court of this State, until such corporation shall have obtained a certificate of authority. This prohibition shall apply to

(2) The failure of a foreign corporation to obtain a certificate of authority to transact business in this State shall not impair the validity of any contract or act of such corporation, and shall not prevent such corporation from defending any action or proceeding in any court of this State.

(3) In addition to any other liabilities imposed by law, a foreign corporation which transacts business in this State without a certificate of authority shall forfeit to the State a penalty of not less than $200.00, nor more than $1,000.00 for each calendar year, not more than 5 years prior thereto, in which it shall have transacted business in this State without a certificate of authority. Such penalty shall be recovered with costs in an action prosecuted by the Attorney General. The court may proceed in such action in a summary manner or otherwise.

Overall Summary for New Mexico

There are no statutes defining what is “transacting business” in New Mexico, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in New Mexico are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

NM Stat § 53-17-1. Admission of foreign corporation.

No foreign corporation shall transact business in this state until it has procured a certificate of authority to do so from the commission. No foreign corporation shall procure a certificate of authority under the Business Corporation Act [Chapter 53, Articles 11 to 18 NMSA 1978] to transact in this state any business which a corporation organized under the Business Corporation Act is not permitted to transact. A foreign corporation shall not be denied a certificate of authority because the laws of the state or country under which the corporation is organized governing its organization and internal affairs differ from the laws of this state, and nothing in the Business Corporation Act authorizes this state to regulate the organization or the internal affairs of such corporation. Without excluding other activities which may not constitute transacting business in this state, a foreign corporation shall not be considered to be transacting business in this state, for the purposes of the Business Corporation Act, by reason of carrying on in this state any one or more of the following activities:

Penalties of Not Registering a Foreign LLC

NM Stat § 53-17-20 Transacting business without certificate of authority.

A. No foreign corporation transacting business in this state without a certificate of authority shall be permitted to maintain any action, suit or proceeding in any court of this state, until the corporation has obtained a certificate of authority. Nor shall any action, suit or proceeding be maintained in any court of this state by any successor or assignee of the corporation on any right, claim or demand arising out of the transaction of business by the corporation in this state, until a certificate of authority has been obtained by the corporation or by a corporation which has acquired all or substantially all of its assets.

B. The failure of a foreign corporation to obtain a certificate of authority to transact business in this state does not impair the validity of any contract or act of the corporation, and does not prevent the corporation from defending any action, suit or proceeding in any court of this state.

C. A foreign corporation which transacts business in this state without a certificate of authority is liable to this state, for the years or parts thereof during which it transacted business in this state without a certificate of authority, in an amount equal to all fees and franchise taxes which would have been imposed upon the corporation had it applied for and received a certificate of authority to transact business in this state as required by the Business Corporation Act [Chapter 53, Articles 11 to 18 NMSA 1978], and thereafter filed all annual reports required by it, plus all penalties for failure to pay the fees and franchise taxes, plus a civil penalty of two hundred dollars ($200) for each offense.

Overall Summary for New York

There are no statutes defining what is “transacting business” in New York, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in New York are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

N.Y. Bus. Corp. Law § 1301. Authorization of foreign corporations.

(a) A foreign corporation shall not do business in this state until it has been authorized to do so as provided in this article. A foreign corporation may be authorized to do in this state any business which may be done lawfully in this state by a domestic corporation, to the extent that it is authorized to do such business in the jurisdiction of its incorporation, but no other business.

(b) Without excluding other activities which may not constitute doing business in this state, a foreign corporation shall not be considered to be doing business in this state, for the purposes of this chapter, by reason of carrying on in this state any one or more of the following activities:

Maintaining or defending any action or proceeding, whether judicial, administrative, arbitrative or otherwise, or effecting settlement thereof or the settlement of claims or disputes.
Holding meetings of its directors or its shareholders.
Maintaining bank accounts.
Maintaining offices or agencies only for the transfer, exchange and registration of its securities, or appointing and maintaining trustees or depositaries with relation to its securities.

(c) The specification in paragraph (b) does not establish a standard for activities which may subject a foreign corporation to service of process under this chapter or any other statute of this state.

(d) A foreign corporation whose corporate name is not acceptable for authorization pursuant to sections 301 and 302 of this chapter, may submit in its application for authority pursuant to section 1304 of this chapter, a fictitious name under which it shall do business in this state. A fictitious name submitted pursuant to this section shall be subject to the provisions of subparagraphs (2) through (9) of paragraph (a) of section 301 and 302 of this chapter. A foreign corporation authorized to do business in this state under a fictitious name pursuant to this section, shall use such fictitious name in all of its dealings with the secretary of state and in the conduct of its business in this state. The provisions of section one hundred thirty of the general business law shall not apply to any fictitious name filed by a foreign corporation pursuant to this section, and a filing under section one hundred thirty of the general business law shall not constitute the adoption of a fictitious name.

Penalties of Not Registering a Foreign LLC

N.Y. Bus. Corp. Law § 1303 Violations.

The attorney-general may bring an action to restrain a foreign corporation from doing in this state without authority any business for the doing of which it is required to be authorized in this state, or from doing in this state any business not set forth in its application for authority or certificate of amendment filed by the department of state. The attorney-general may bring an action or special proceeding to annul the authority of a foreign corporation doing in this state any business not set forth in its application for authority or certificate of amendment or the authority of which was obtained through fraudulent misrepresentation or concealment of a material fact or to enjoin or annul the authority of any foreign corporation which within this state contrary to law has done or omitted any act which if done by a domestic corporation would be a cause for its dissolution under section 1101 (Attorney-general’s action for judicial dissolution) or to annul the authority of a foreign corporation that has been dissolved or had its authority or existence otherwise terminated or cancelled in the jurisdiction of its incorporation. The attorney-general shall deliver a certified copy of the order of annulment to the department of state. Upon the filing thereof by the department of state the authority of the foreign corporation to do business in this state shall be annulled. The secretary of state shall continue as agent of the foreign corporation upon whom process against it may be served in any action or special proceeding based upon any liability or obligation incurred by the foreign corporation within the state prior to the filing of the certified copy of the order of annulment by the department of state.

N.Y. Bus. Corp. Law § 1312 Actions or special proceedings by unauthorized foreign corporations.

(a) A foreign corporation doing business in this state without authority shall not maintain any action or special proceeding in this state unless and until such corporation has been authorized to do business in this state and it has paid to the state all fees and taxes imposed under the tax law or any related statute, as defined in section eighteen hundred of such law, as well as penalties and interest charges related thereto, accrued against the corporation. This prohibition shall apply to any successor in interest of such foreign corporation.

Overall Summary for North Carolina

There are no statutes defining what is “transacting business” in North Carolina, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in North Carolina are: cannot bring a lawsuit in the state and although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

N.C. Gen. Stat. § 55-15-01. Authority to transact business required.

(a) A foreign corporation may not transact business in this State until it obtains a certificate of authority from the Secretary of State.

(b) Without excluding other activities which may not constitute transacting business in this State, a foreign corporation shall not be considered to be transacting business in this State solely for the purposes of this Chapter, by reason of carrying on in this State any one or more of the following activities:

Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement thereof or the settlement of claims or disputes;
Holding meetings of its directors or shareholders or carrying on other activities concerning its internal affairs;
Maintaining bank accounts or borrowing money in this State, with or without security, even if such borrowings are repeated and continuous transactions;
Maintaining offices or agencies for the transfer, exchange, and registration of its securities, or appointing and maintaining trustees or depositories with relation to its securities;
Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where such orders require acceptance without this State before becoming binding contracts;
Making or investing in loans with or without security including servicing of mortgages or deeds of trust through independent agencies within the State, the conducting of foreclosure proceedings and sale, the acquiring of property at foreclosure sale and the management and rental of such property for a reasonable time while liquidating its investment, provided no office or agency therefor is maintained in this State;
Taking security for or collecting debts due to it or enforcing any rights in property securing the same;
Transacting business in interstate commerce;
Conducting an isolated transaction completed within a period of six months and not in the course of a number of repeated transactions of like nature;
Selling through independent contractors;
Owning, without more, real or personal property.

(d) Foreign insurance companies that are licensed by the Commissioner of Insurance are not required to obtain a certificate of authority from the Secretary of State.

Penalties of Not Registering a Foreign LLC

N.C. Gen. Stat. § 55-15-02. Consequences of transacting business without authority.

(a) No foreign corporation transacting business in this State without permission obtained through a certificate of authority under this Chapter or through domestication under prior acts shall be permitted to maintain any action or proceeding in any court of this State unless the foreign corporation has obtained a certificate of authority prior to trial. An issue arising under this subsection must be raised by motion and determined by the trial judge prior to trial.

(b) Reserved for future codification purposes.

(d) A foreign corporation failing to obtain a certificate of authority as required by this Chapter or by prior acts then applicable shall be liable to the State for the years or parts thereof during which it transacted business in this State without a certificate of authority in an amount equal to all fees and taxes which would have been imposed by law upon such corporation had it duly applied for and received such permission, plus interest and all penalties imposed by law for failure to pay such fees and taxes. In addition, the foreign corporation shall be liable for a civil penalty of ten dollars ($10.00) for each day, but not to exceed a total of one thousand dollars ($1,000) for each year or part thereof, it transacts business in this State without a certificate of authority. The Attorney General may bring actions to recover all amounts due the State under the provisions of this subsection. The clear proceeds of civil penalties provided for in this subsection shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2.

(e) Notwithstanding subsection (a), the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this State.

(f) The Secretary of State is hereby directed to require that every foreign corporation transacting business in this State comply with the provisions of this Chapter. The Secretary of State is authorized to employ such assistants as shall be deemed necessary in his office for the purpose of enforcing the provisions of this Article and for making such investigations as shall be necessary to ascertain foreign corporations now transacting business in this State which may have failed to comply with the provisions of this Chapter.

Overall Summary for North Dakota

There are no statutes defining what is “transacting business” in North Dakota, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in North Dakota are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

N.D. Cent. Code § 10-19.1-143. Foreign corporation – Transactions not constituting transacting business.

1. The following activities of a foreign corporation, among others, do not constitute transacting business within the meaning of this chapter:

2. The term “transacting business” as used in this section has no effect on personal jurisdiction under the North Dakota Rules of Civil Procedure.

3. For purposes of this section, any foreign corporation that owns income-producing real or tangible personal property in this state, other than property exempted under subsection 1, will be considered transacting business in this state.

4. The list of activities in subsection 1 is not exhaustive. This section does not apply in determining the contracts or activities that may subject a foreign corporation to service of process or taxation in this state or to regulation under any other law of this state.

Penalties of Not Registering a Foreign LLC

N.D. Cent. Code § 10-19.1-142. Foreign corporation – Transaction of business without certificate of authority.

1. A foreign corporation transacting business in this state may not maintain any claim, action, suit, or proceeding in any court of this state until it possesses a certificate of authority.

2. The failure of a foreign corporation to obtain a certificate of authority does not impair the validity of any contract or act of the foreign corporation or prevent the foreign corporation from defending any claim, action, suit, or proceeding in any court of this state.

3. A foreign corporation, by transacting business in this state without a certificate of authority, appoints the secretary of state as its agent upon whom any notice, process, or demand may be served.

4. A foreign corporation that transacts business in this state without a valid certificate of authority is liable to the state for the years or parts of years during which it transacted business in this state without the certificate in an amount equal to all fees that would have been imposed by this chapter upon that corporation had it duly obtained the certificate, filed all reports required by this chapter, and paid all penalties imposed by this chapter. The attorney general shall bring proceedings to recover all amounts due this state under the provisions of this section.

5. A foreign corporation that transacts business in this state without a valid certificate of authority is subject to a civil penalty, payable to the state, and not to exceed five thousand dollars. Each director and each officer or agent who authorizes, directs, or participates in the transaction of business in this state on behalf of a foreign corporation that does not have a certificate is subject to a civil penalty, payable to the state, and not to exceed one thousand dollars.

6. The civil penalties set forth in subsection 5 may be recovered in an action brought within the district court of Burleigh County by the attorney general. Upon a finding by the court that a foreign corporation or any of its members, directors, officers, or agents have transacted business in this state in violation of this chapter, the court shall issue, in addition to the imposition of a civil penalty, an injunction restraining the further transaction of the business of the foreign corporation and the further exercise of any rights and privileges by the corporation in this state. The foreign corporation must be enjoined from transacting business in this state until all civil penalties plus any interest and court costs that the court may assess have been paid and until the foreign corporation has otherwise complied with the provisions of this chapter.

7. A member of a foreign corporation is not liable for the debts and obligations of the corporation solely by reason of the corporation having transacted business in this state without a valid certificate of authority.

Overall Summary for Ohio

There are no statutes defining what is “transacting business” in Ohio, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Ohio are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable, and a fourth degree misdemeanor for an officer of a corporation who transacts business on a corporation’s behalf without maintaining a license.

What Does NOT Constitute Transaction of Business

Ohio Rev. Code Ann. § 1776.88 What constitutes transacting business.

(A) Activities of a foreign limited liability partnership that do not constitute transacting business for the purpose of section 1776.86 of the Revised Code include all of the following:

Maintaining, defending, or settling an action or proceeding;
Holding meetings of its partners or carrying on any other activity concerning its internal affairs;
Maintaining bank accounts;
Maintaining offices or agencies for the transfer, exchange, and registration of the partnership’s own securities or maintaining trustees or depositories with respect to those securities;
Selling through independent contractors;
Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
Creating or acquiring indebtedness, with or without a mortgage or other security interest in property;
Collecting debts or foreclosing mortgages or other security interests in property securing the debts, and holding, protecting, and maintaining property so acquired;
Conducting an isolated transaction that is completed within thirty days and is not one in the course of similar transactions;
Transacting business in interstate commerce.

(B) For purposes of section 1776.86 of the Revised Code, the ownership in this state of income-producing real property or tangible personal property, other than property excluded under division (A) of this section, constitutes transacting business in this state.

(C) This section does not apply in determining the contacts or activities that may subject a foreign limited liability partnership to service of process, taxation, or regulation under any other law of this state.

Penalties of Not Registering a Foreign LLC

Ohio Rev. Code Ann. § 1703.28 Forfeiture for transacting business without license.

Any foreign corporation required to be licensed under sections 1703.01 to 1703.31, inclusive, of the Revised Code, which transacts business in this state without being so licensed, or when its license has expired or been canceled and has not been reinstated, shall forfeit not less than two hundred fifty dollars nor more than ten thousand dollars. Such forfeiture shall be recovered in an action in the name of the state brought in the court of common pleas of Franklin county, or in any county in which the corporation has transacted business or has property or a place of business, by the attorney general or by the prosecuting attorney. If such action is brought by the attorney general such forfeiture shall on collection be paid into the state treasury to the credit of the general revenue fund, and if brought by the prosecuting attorney one half of such forfeiture shall on collection be paid to the treasurer of the county in which such action was brought and one half shall be paid into the state treasury to the credit of the general revenue fund. In addition to such forfeiture the court shall require that the corporation pay all amounts it should have paid under sections 1703.01 to 1703.31, inclusive, of the Revised Code, as a filing fee and as annual franchise taxes, plus interest thereon at the rate of six per cent per annum, for all years in which the court determines it was transacting business in this state without being so licensed and shall render judgment for such amount. Proceedings for the recovery of such forfeiture, filing fee, and annual franchise taxes must be commenced not later than five years after such corporation has ceased to transact any business in this state.
For good cause shown, the secretary of state, with the consent of the attorney general, may remit the forfeiture or a part thereof, with or without bringing suit and before or after judgment, and the court in which an action is pending for the collection of a forfeiture, may remit all or part of the forfeiture for good cause shown.

Ohio Rev. Code Ann. § 1703.29 Unlicensed foreign corporation contracts not affected – corporation cannot maintain an action.

(A) The failure of any corporation to obtain a license under sections 1703.01 to 1703.31 of the Revised Code, does not affect the validity of any contract with such corporation, but no foreign corporation that should have obtained such license shall maintain any action in any court until it has obtained such license. Before any such corporation shall maintain such action on any cause of action arising at the time when it was not licensed to transact business in this state, it shall pay to the secretary of state a forfeiture of two hundred fifty dollars and file in the secretary of state’s office the papers required by divisions (B) or (C) of this section, whichever is applicable.

(B) If such corporation has not been previously licensed to do business in this state or if its license has been surrendered it shall file as required by division (A) of this section:

Its application for a license certificate, together with the filing fee, with such information as the secretary of state requires as to the time it began to transact business in this state and as to the number of its issued shares represented in this state, and with the license fees on its shares represented in this state plus a forfeiture of fifteen per cent thereon.
A certificate from the tax commissioner that the corporation has paid all taxes that it should have paid had it qualified to do business in this state at the time it began to do so, plus any penalties assessable on said taxes on account of failure to pay them within the time prescribed by law, or a certificate of the commissioner that the corporation has furnished security satisfactory to the commissioner for the payment of all such taxes and penalties.

(C) If such corporation has been previously licensed to transact business in this state and its license has expired or has been canceled by the secretary of state upon order of the commissioner, or for failure to designate an agent for service of process, it shall file with the secretary of state its application for reinstatement, as provided by law, together with the proper reinstatement fee plus a forfeiture of fifteen per cent thereon.
Upon the filing of such application and payment of such fees and penalties or forfeitures, the secretary of state shall issue to such corporation a license certificate.

Ohio Rev. Code Ann. § 1703.30 Officer of unlicensed foreign corporation shall not transact business.

No officer of a foreign corporation shall transact business in this state on its behalf, if such corporation is required by sections 1703.01 to 1703.31, inclusive, of the Revised Code, to procure and maintain a license but has not done so.

Ohio Rev. Code Ann. § 1703.99 Penalty.

Whoever violates section 1703.30 of the Revised Code is guilty of a misdemeanor of the fourth degree.

Overall Summary for Oklahoma

There are no statutes defining what is “transacting business” in Oklahoma, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Oklahoma are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

18 OK Stat § 18-2049

A. The following activities of a foreign limited liability company, among others, do not constitute transacting business
within the meaning of this act:

Maintaining, defending, or settling any proceeding;
Holding meetings of its members or carrying on any other activities concerning its internal affairs;
Maintaining bank accounts;
Maintaining offices or agencies for the transfer, exchange and registration of the foreign limited liability
company’s own securities or maintaining trustees or depositaries with respect to those securities;
Selling through independent contractors;
Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders
require acceptance outside this state before they become contracts;
Creating or acquiring indebtedness, mortgages and security interests in real or personal property;
Securing or collecting debts or enforcing mortgages and security interest in property securing the debts;
Holding, protecting, renting, maintaining and operating real or personal property in this state so acquired;
Selling or transferring title to property in this state to any person; or
Conducting an isolated transaction that is completed within thirty (30) days and that is not one in the course
of repeated transactions of a like nature.

B. For the purposes of this section, any foreign limited liability company which owns income-producing real or
tangible personal property in this state, other than property exempted by subsection A of this section, will be
considered transacting business in this state.

C. This section does not apply in determining the contracts or activities that may subject a foreign limited liability
company to service of process or taxation in this state or to regulation under any other law of this state.

Penalties of Not Registering a Foreign LLC

18 OK Stat § 18-2048

A. A foreign limited liability company transacting business in this state may not maintain an action, suit, or proceeding in a court of this state until it has registered in this state as provided in this act.

B. The failure of a foreign limited liability company to register in this state does not impair the validity of any contract or act of the foreign limited liability company or prevent the foreign limited liability company from defending any action, suit, or proceeding in any court of this state.

C. A foreign limited liability company, by transacting business in this state without registration, appoints the Office of the Secretary of State as its agent for service of process with respect to a cause of action arising out of the transaction of business in this state.

D. A member of a foreign limited liability company is not liable for the debts and obligations of the limited liability company solely by reason of such company’s having transacted business in this state without a valid certificate of registration.

Overall Summary for Oregon

There are no statutes defining what is “transacting business” in Oregon, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Oregon are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Or. Rev. Stat. § 60.701 Authority to transact business required.

(1) A foreign corporation may not transact business in this state until it has been authorized to do so by the Secretary of State.

(2) The following activities among others, do not constitute transacting business within the meaning of subsection (1) of this section:

(2) of this section is not exhaustive.

(3) The list of activities in subsection

Penalties of Not Registering a Foreign LLC

Or. Rev. Stat. § 60.704. Consequences of transacting business without authority

(1) A foreign corporation transacting business in this state without authorization from the Secretary of State may not maintain a proceeding in any court in this state until it obtains authorization from the Secretary of State to transact business in this state.

(2) The successor to a foreign corporation that transacted business in this state without authority to transact business in this state and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this state until the foreign corporation or its successor obtains authorization from the Secretary of State to transact business in this state.

(3) A court may stay a proceeding commenced by a foreign corporation, its successor or assignee until it determines whether the foreign corporation or its successor requires authorization from the Secretary of State to transact business in this state. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the authorization.

(4) A foreign corporation that transacts business in this state without authority shall be liable to this state for the years or parts thereof during which it transacted business in this state without authority in an amount equal to all fees that would have been imposed by this chapter upon such corporation had it duly applied for and received authority to transact business in this state as required by this chapter and thereafter filed all reports required by this chapter.

(5) Notwithstanding subsections (1) and (2) of this section, the failure of a foreign corporation to obtain authority to transact business in this state does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.

Overall Summary for Pennsylvania

There are no statutes defining what is “transacting business” in Pennsylvania, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Pennsylvania are: cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

15 Pa. Cons. Stat. § 403. Activities not constituting doing business.

(a) General rule. –Activities of a foreign filing association or foreign limited liability partnership that do not constitute doing business in this Commonwealth under this chapter shall include the following:

Maintaining, defending, mediating, arbitrating or settling an action or proceeding.
Carrying on any activity concerning its internal affairs, including holding meetings of its interest holders or governors.
Maintaining accounts in financial institutions.
Maintaining offices or agencies for the transfer, exchange and registration of securities of the association or maintaining trustees or depositories with respect to the securities.
Selling through independent contractors.
Soliciting or obtaining orders by any means if the orders require acceptance outside of this Commonwealth before the orders become contracts.
Creating or acquiring indebtedness, mortgages or security interests in property.
Securing or collecting debts or enforcing mortgages or security interests in property securing the debts and holding, protecting or maintaining property so acquired.
Conducting an isolated transaction that is not in the course of similar transactions.
Owning, without more, property.
Doing business in interstate or foreign commerce.

(b) Participation in other associations. –Being an interest holder or governor of a foreign association that does business in this Commonwealth shall not by itself constitute doing business in this Commonwealth.

(c) Applicability. –This section shall not apply in determining the contacts or activities that may subject a foreign filing association or foreign limited liability partnership to service of process, taxation or regulation under laws of this Commonwealth other than this title.

Penalties of Not Registering a Foreign LLC

15 Pa. Cons. Stat. § 411. Registration to do business in this Commonwealth.

(a) Registration required. –Except as provided in section 401 (relating to application of chapter) or subsection (g), a foreign filing association or foreign limited liability partnership may not do business in this Commonwealth until it registers with the department under this chapter.

(b) Penalty for failure to register. –A foreign filing association or foreign limited liability partnership doing business in this Commonwealth may not maintain an action or proceeding in this Commonwealth unless it is registered to do business under this chapter.

(c) Contracts and acts not impaired by failure to register. –The failure of a foreign filing association or foreign limited liability partnership to register to do business in this Commonwealth does not impair the validity of a contract or act of the foreign filing association or foreign limited liability partnership or preclude it from defending an action or proceeding in this Commonwealth.

(d) Limitations on liability preserved. –A limitation on the liability of an interest holder or governor of a foreign filing association or of a partner of a foreign limited liability partnership is not waived solely because the foreign filing association or foreign limited liability partnership does business in this Commonwealth without registering.

(e) Governing law not affected. –Section 402 (relating to governing law) applies even if a foreign association fails to register under this chapter.

Overall Summary for Rhode Island

There are no statutes defining what is “transacting business” in Rhode Island, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Rhode Island are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

R.I. Gen. Laws § 7-1.2-1401 Admission of foreign corporation and other entities. –

(a) No foreign corporation has the right to transact business in this state until it has procured a certificate of authority to do so from the secretary of state. No foreign corporation is entitled to procure a certificate of authority under this chapter to transact any business in this state which a corporation organized under this chapter is not permitted to transact. A foreign corporation may not be denied a certificate of authority because the laws of the state or country under which the corporation is organized governing its organization and internal affairs differ from the laws of this state, and nothing contained in this chapter authorizes this state to regulate the organization or the internal affairs of the corporation.

(b) Without excluding other activities which may not constitute transacting business in this state, a foreign corporation is not considered to be transacting business in this state, for the purposes of this chapter, because of carrying on in this state any one or more of the following activities:

Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement of the suit or the settlement of claims or disputes.
Holding meetings of its directors or shareholders or carrying on other activities concerning its internal affairs.
Maintaining bank accounts.
Maintaining offices or agencies for the transfer, exchange, and registration of its securities, or appointing and maintaining trustees or depositaries with relation to its securities.
Effecting sales through independent contractors.
Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where the orders require acceptance outside of this state before becoming binding contracts.
Creating, as borrower or lender, or acquiring indebtedness or mortgages or other security interests in real or personal property.
Securing or collecting debts or enforcing any rights in property securing the debts.
Transacting any business in interstate commerce.
Conducting an isolated transaction completed within a period of thirty (30) days and not in the course of a number of repeated transactions of like nature.
Acting as a general partner of a limited partnership which has filed a certificate of limited partnership as provided in § 7-13-8 or has registered with the secretary of state as provided in § 7-13-49.
Acting as a member of a limited liability company which has registered with the secretary of state as provided in § 7-16-49.

(c) Any “other entity”, as defined in § 7-16-5.1(a), Massachusetts trust or business trust established by law of any other state, desiring to do business in this state, is deemed to be a foreign corporation and is required to register under, and comply with the provisions of, this chapter.

Penalties of Not Registering a Foreign LLC

R.I. Gen. Laws § 7-1.2-1418. Transacting business without certificate of authority. –

(a) No foreign corporation transacting business in this state without a certificate of authority is permitted to maintain any action, suit, or proceeding in any court of this state, until the corporation has obtained a certificate of authority. Nor may any action, suit, or proceeding be maintained in any court of this state by any successor or assignee of the corporation on any right, claim, or demand arising out of the transaction of business by the corporation in this state, until a certificate of authority has been obtained by the corporation or by its successor.

(b) The failure of a foreign corporation to obtain a certificate of authority to transact business in this state does not impair the validity of any contract or act of the corporation, and does not prevent the corporation from defending any action, suit, or proceeding in any court of this state.

(c) A foreign corporation which transacts business in this state without a certificate of authority is liable to this state, for the years or parts of years during which it transacted business in this state without a certificate of authority, in an amount equal to all fees and franchise taxes which would have been imposed upon the corporation had it duly applied for and received a certificate of authority to transact business in this state as required by this chapter and subsequently filed all reports required by this chapter, plus all penalties imposed by this chapter for failure to pay the fees and franchise taxes. The attorney general may bring proceedings to recover all amounts due this state under the provisions of this section.

(d) The superior court has jurisdiction to enjoin any foreign corporation, or any agent of a foreign corporation, from transacting any business in this state if the corporation fails to comply with any section of this chapter applicable to it or if the corporation secured a certificate of the secretary of state under §§ 7-1.2-1405 and 7-1.2-1406 on the basis of false or misleading representations. The attorney general may, upon motion or upon the relation of proper parties, proceed for this purpose by complaint in any county in which the corporation is doing business.

Overall Summary for South Carolina

There are no statutes defining what is “transacting business” in South Carolina, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in South Carolina are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

SC Code § 33-15-101

(a) A foreign corporation may not transact business in this State until it obtains a certificate of authority from the Secretary of State.

(b) The following activities, among others, do not constitute transacting business within the meaning of subsection (a):

maintaining, defending, or settling a proceeding;
holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
maintaining bank accounts;
maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or maintaining trustees or depositories with respect to those securities;
selling through independent contractors;
soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this State before they become contracts;
creating or acquiring any indebtedness, mortgages, and security interests in real or personal property;
securing or collecting debts or enforcing mortgages, security interests, or other rights in property securing debts;
owning, without more, real or personal property;
conducting an isolated transaction that is completed within thirty days and that is not one in the course of repeated transactions of a like nature;
transacting business in interstate commerce;
owning and controlling a subsidiary corporation incorporated in or transacting business within this State; or
owning, without more, an interest in a limited liability company organized or transacting business in this State.

Penalties of Not Registering a Foreign LLC

SC Code § 33-15-102

(a) A foreign corporation transacting business in this State without a certificate of authority may not maintain a proceeding in any court in this State until it obtains a certificate of authority.

(d) A foreign corporation is liable for a civil penalty of ten dollars for each day but not to exceed a total of one thousand dollars for each year it transacts business in this State without a certificate of authority. The Attorney General may collect all penalties due under this subsection.

Overall Summary for South Dakota

There are no statutes defining what is “transacting business” in South Dakota, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in South Dakota are: cannot bring a lawsuit in the state

What Does NOT Constitute Transaction of Business

S.D. Codified Laws § 47-1A-1501.

Authority to transact business required. A foreign corporation may not transact business in this state until it obtains a certificate of authority from the Office of the Secretary of State. The following activities, among others, do not constitute transacting business within the meaning of this section:

Maintaining, defending, or settling any proceeding;
Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
Maintaining bank accounts;
Maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or maintaining trustees or depositories with respect to those securities;
Selling through independent contractors;
Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
Creating or acquiring indebtedness, mortgages, and security interests in real or personal property;
Securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
Owning, without more, real or personal property;
Conducting an isolated transaction that is completed within thirty days and that is not one in the course of repeated transactions of a like nature; and
Transacting business in interstate commerce.

Penalties of Not Registering a Foreign LLC

S.D. Codified Laws § 47-1A-1502. Consequences of transacting business without authority.

A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority. The successor to a foreign corporation that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this state until the foreign corporation or its successor obtains a certificate of authority.

Overall Summary for Tennessee

There are no statutes defining what is “transacting business” in Tennessee, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Tennessee are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Tenn. Code Ann. § 48-249-902. Transactions not constituting transacting business.

(a) General. The following activities of a foreign LLC, among others, do not constitute transacting business within the meaning of this part:

Maintaining, defending or settling any proceeding, claim or dispute;
Holding meetings of its members or representatives, or carrying on any other activities concerning its internal affairs;
Maintaining bank accounts;
Maintaining offices or agencies for the transfer, exchange and registration of the foreign LLC’s own securities, or appointing and maintaining trustees or depositories with respect to those securities;
Selling through independent contractors;
Soliciting or obtaining orders, whether by mail or through representatives or otherwise, if the orders require acceptance outside this state before they become contracts;
Creating or acquiring indebtedness, deeds of trust, mortgages and security interests in real or personal property;
Securing or collecting debts or enforcing mortgages, deeds of trust and security interests in property securing the debts;
Owning, without more, real or personal property; provided, that, for a reasonable time, the management and rental of real property acquired in connection with enforcing a mortgage or deed of trust shall also not be considered transacting business, if the owner is attempting to liquidate the investment, and if no office or other agency therefor, other than an independent agency, is maintained in this state;
Conducting an isolated transaction that is completed within one (1) month and that is not a transaction in the course of repeated transactions of a like nature; or
Transacting business in interstate commerce.

(b) Entity not transacting business. An entity formed under the laws of any jurisdiction other than this state shall not be deemed to be transacting business in this state for purposes of obtaining a certificate of authority to transact business, solely by reason of its being or acting in its capacity as a member or manager of a domestic or foreign LLC.

(c) Nonexhaustive enumeration. The enumeration of activities in subsections (a) and (b) is not exhaustive, and is applicable solely to determine whether a foreign LLC is required to procure a certificate of authority and for no other purpose. This section does not apply in determining the contacts or activities that may subject a foreign LLC or its members to service of process or taxation in this state, or to regulation under any other law of this state.

Penalties of Not Registering a Foreign LLC

Tenn. Code Ann. § 48-65-102. Consequences of transacting business without authority.

(a) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(b) The successor to a foreign corporation that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding on that cause of action in any court in this state until the foreign corporation or its successor obtains a certificate of authority.

(d) A foreign corporation which transacts business or conducts affairs in this state without a certificate of authority shall be liable to this state, for the years or parts thereof during which it transacted business or conducted affairs in this state without a certificate of authority, in an amount equal to treble the amount of all fees, penalties and taxes, plus interest, which would have been imposed by the laws of this state upon such corporation had it duly applied for and received a certificate of authority as required by this chapter, and thereafter had failed to file all reports required.

(e) An application for a certificate of authority by a foreign corporation which has transacted business in this state without a certificate of authority shall not be filed by the secretary until all amounts due under subsection (d) shall have been paid.

(f) Notwithstanding subsections (a) and (b), the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.

Overall Summary for Texas

There are no statutes defining what is “transacting business” in Texas, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Texas are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Tex. Bus. Org. Code Ann. § Sec. 9.251. ACTIVITIES NOT CONSTITUTING TRANSACTING BUSINESS IN THIS STATE.

For purposes of this chapter, activities that do not constitute transaction of business in this state include:

maintaining or defending an action or suit or an administrative or arbitration proceeding, or effecting the settlement of:

holding a meeting of the entity’s managerial officials, owners, or members or carrying on another activity concerning the entity’s internal affairs;

maintaining a bank account;

maintaining an office or agency for:

voting the interest of an entity the foreign entity has acquired;

effecting a sale through an independent contractor;

creating, as borrower or lender, or acquiring indebtedness or a mortgage or other security interest in real or personal property;

securing or collecting a debt due the entity or enforcing a right in property that secures a debt due the entity;

transacting business in interstate commerce;

conducting an isolated transaction that:

in a case that does not involve an activity that would constitute the transaction of business in this state if the activity were one of a foreign entity acting in its own right:

regarding a debt secured by a mortgage or lien on real or personal property in this state:

investing in or acquiring, in a transaction outside of this state, a royalty or other nonoperating mineral interest;

executing a division order, contract of sale, or other instrument incidental to ownership of a nonoperating mineral interest; or

owning, without more, real or personal property in this state

Penalties of Not Registering a Foreign LLC

Tex. Bus. Org. Code Ann. § 9.051 Transacting Business or Maintaining Court Proceeding Without Registration.

(a) On application by the attorney general, a court may enjoin a foreign filing entity or the entity’s agent from transacting business in this state if:

the entity is not registered in this state; or
the entity’s registration is obtained on the basis of a false or misleading representation. (b) A foreign filing entity or the entity’s legal representative may not maintain an action, suit, or proceeding in a court of this state, brought either directly by the entity or in the form of a derivative action in the entity’s name, on a cause of action that arises out of the transaction of business in this state unless the foreign filing entity is registered in accordance with this chapter. This subsection does not affect the rights of an assignee of the foreign filing entity as:

affect the validity of any contract or act of the foreign filing entity;
prevent the entity from defending an action, suit, or proceeding in a court in this state; or
except as provided by Subsection (d), cause any owner, member, or managerial official of the foreign filing entity to become liable for the debts, obligations, or liabilities of the foreign filing entity.

(d) Subsection (c)(3) does not apply to a general partner of a foreign limited partnership.

Tex. Bus. Org. Code Ann. §. 9.052. Civil Penalty.

(a) A foreign filing entity that transacts business in this state and is not registered under this chapter is liable to this state for a civil penalty in an amount equal to all:

fees and taxes that would have been imposed by law on the entity had the entity registered when first required and filed all reports required by law; and
penalties and interest imposed by law for failure to pay those fees and taxes.

(b) The attorney general may bring suit to recover amounts due to this state under this section.

Tex. Bus. Org. Code Ann. §. Sec. 9.054. Late Filing Fee.

(a) The secretary of state may collect from a foreign filing entity a late filing fee if the entity has transacted business in this state for more than 90 days without registering under this chapter. The secretary may condition the effectiveness of a registration after the 90-day period on the payment of the late filing fee.

(b) The amount of the late filing fee is an amount equal to the product of the amount of the registration fee for the foreign filing entity multiplied by the number of calendar years that the entity transacted business in this state without being registered. For purposes of computing the fee, a partial calendar year is counted as a full calendar year.

Overall Summary for Utah

There are no statutes defining what is “transacting business” in Utah, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Utah are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Utah Code Ann. § 16-10a-1501 Authority to transact business required.

(1) A foreign corporation may not transact business in this state until its application for authority to transact business is filed by the division. This applies to foreign corporations that conduct a business governed by other statutes of this state only to the extent this part is not inconsistent with those other statutes.

(2) The following, nonexhaustive list of activities does not constitute “transacting business” within the meaning of Subsection (1):

(3) Nothing in this section limits or affects the right to subject a foreign corporation which does not, or is not required to, have authority to transact business in this state to the jurisdiction of the courts of this state or to serve upon any foreign corporation any process, notice, or demand required or permitted by law to be served upon a corporation pursuant to any applicable provision of law or pursuant to any applicable rules of civil procedure.

Penalties of Not Registering a Foreign LLC

Utah Code Ann. § 16-10a-1502 Consequences of transacting business without authority.

(1) A foreign corporation transacting business in this state without authority, or anyone in its behalf, may not maintain a proceeding in any court in this state until an application for authority to transact business is filed with the division.

(2) The successor to a foreign corporation that transacted business in this state without authority and the assignee of a cause of action arising out of that business may not maintain a
proceeding based on that cause of action in any court in this state until an application for authority to transact business is filed on behalf of the foreign corporation or its successor.

(3) A court may stay a proceeding commenced by a foreign corporation, its successor, or assignee until it determines whether the foreign corporation, its successor, or assignee is required to file an application for authority to transact business. If it so determines, the court may further stay the proceeding until the required application for authority to transact business has been filed by the division.

(4) A foreign corporation that transacts business in this state without authority is subject to a civil penalty, payable to this state, of $100 for each day in which it transacts business in this state without authority. However, the penalty may not exceed a total of $5,000 for each year. Each officer of a foreign corporation who authorizes, directs, or participates in the transaction of business in this state without authority and each agent of a foreign corporation who transacts business in this state on behalf of a foreign corporation that is not authorized is subject to a civil penalty, payable to this state, not exceeding $1,000.

(5) The civil penalties set forth in Subsection (4) may be recovered in an action brought in an appropriate court in Salt Lake County or in any other county in this state in which the corporation has a registered, principal, or business office or in which it has transacted business. Upon a finding by the court that a foreign corporation or any of its officers or agents have transacted business in this state in violation of this part, the court shall issue, in addition to or instead of a civil penalty, an injunction restraining the further transaction of the business of the foreign corporation and the further exercise of any corporate rights and privileges in this state. Upon issuance of the injunction, the foreign corporation shall be enjoined from transacting business in this state until all civil penalties have been paid, plus any interest and court costs assessed by the court, and until the foreign corporation has otherwise complied with the provisions of this part.

(6) Notwithstanding Subsections (1) and (2), the failure of a foreign corporation to have authority to transact business in this state does not impair the validity of its corporate acts, nor does the failure prevent the corporation from defending any proceeding in this state.

Overall Summary for Vermont

There are no statutes defining what is “transacting business” in Vermont, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Vermont are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Vt. Stat. Ann. 11A, § 15.01. Authority to transact business required.

(a) A foreign corporation may not transact business in this state until it obtains a certificate of authority from the secretary of state.

(b) Except as otherwise provided, “doing business” or “transacting business” shall mean and include each act, power or privilege exercised or enjoyed in this state by a foreign corporation.

(c) Among others, the following activities without more do not constitute transacting business for the purpose of determining whether a corporation is required to obtain a certificate of authority under subsection (a) of this section:

maintaining, defending, or settling any proceeding;
holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
maintaining bank accounts;
maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or maintaining trustees or depositaries with respect to those securities;
selling through independent contractors;
soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
creating or acquiring indebtedness, mortgages, and security interests in real or personal property;
without limiting the generality of the other provisions of this section, making, purchasing and servicing loans if the corporation is a foreign savings bank or a foreign corporation doing a banking business and it participates with a banking corporation or a trust company of this state;
securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
owning real or personal property;
conducting an isolated transaction that is not one in the course of repeated transactions of a like nature;
transacting business in interstate commerce.

(d) In addition to the requirements of subsection (a) of this section and notwithstanding subsection (c), a foreign banking corporation or trust company that does not have a place of business in this state pursuant to section 8 V.S.A. § 654 or 1352 shall obtain a certificate of authority from the secretary of state to act as executor or trustee in this state under the last will and testament of any deceased resident of this state or of any deceased resident of another state owning property in this state. The secretary of state shall not issue the certificate unless:

by the law of the state of its incorporation the foreign banking corporation or trust company may be appointed and may accept appointment to act as executor of or trustee under the last will and testament of any deceased person in the state of its appointment; and
banking corporations or trust companies of this state are permitted to act as executors or trustees in the state where such foreign banking corporation or trust company has its domicile.

(e) This section shall have no applicability for the purpose of determining jurisdiction under subchapter 6 of chapter 25 of Title 12 or for the purpose of determining the tax liability of a corporation.

Penalties of Not Registering a Foreign LLC

Vt. Stat. Ann. 11A, § 15.02. Consequences of transacting business without authority.

(a) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding or raise a counterclaim, crossclaim or affirmative defense in any court in this state until it obtains a certificate of authority.

(b) The successor to a foreign corporation that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding or raise a counterclaim, crossclaim or affirmative defense based on that cause of action in any court in this state until the foreign corporation or its successor obtains a certificate of authority.

(d) A foreign corporation is liable to the state for:

a civil penalty of $50.00 for each day, but not to exceed a total of $1,000.00 for each year, it transacts business in this state without a certificate of authority;
an amount equal to all fees that would have been imposed under this chapter during the years, or parts thereof, it transacted business in this state without a certificate of authority; and
such other penalties as are imposed by law. The attorney general may collect all penalties due under this subsection.

(e) Upon petition of the attorney general, a foreign corporation not in compliance with this chapter, and its officers and agents, may be enjoined by the courts of this state from doing business within this state.

(f) Notwithstanding subsections (a) and (b) of this section, the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts, to the extent they are otherwise in compliance with law, or prevent it from defending any proceeding in this state.

Overall Summary for Virginia

There are no statutes defining what is “transacting business” in Virginia, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Virginia are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Va. Code Ann. § 13.1-757 Authority to transact business required.

A. A foreign corporation may not transact business in the Commonwealth until it obtains a certificate of authority from the Commission.

B. The following activities, among others, do not constitute transacting business within the meaning of subsection A:

Maintaining, defending, or settling any proceeding;
Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
Maintaining bank accounts;
Maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or maintaining trustees or depositories with respect to those securities;
Selling through independent contractors;
Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this Commonwealth before they become contracts;
Creating or acquiring indebtedness, deeds of trust, and security interests in real or personal property;
Securing or collecting debts or enforcing deeds of trust and security interests in property securing the debts;
Owning, without more, real or personal property;
Conducting an isolated transaction that is completed within 30 days and that is not one in the course of repeated transactions of a like nature;
For a period of less than 90 consecutive days, producing, directing, filming, crewing or acting in motion picture feature films, television series or commercials, or promotional films which are sent outside of the Commonwealth for processing, editing, marketing and distribution. The term “transacting business” as used in this subsection shall have no effect on personal jurisdiction under § 8.01-328.1; or
Serving, without more, as a general partner of, or as a partner in a partnership which is a general partner of, a domestic or foreign limited partnership that does not otherwise transact business in the Commonwealth.

C. The list of activities in subsection B is not exhaustive.

Penalties of Not Registering a Foreign LLC

Va. Code Ann. § 13.1-758 Consequences of transacting business without authority.

A. A foreign corporation transacting business in the Commonwealth without a certificate of authority may not maintain a proceeding in any court in the Commonwealth until it obtains a certificate of authority.

B. The successor to a foreign corporation that transacted business in the Commonwealth without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in the Commonwealth until the foreign corporation or its successor obtains a certificate of authority.

C. A court may stay a proceeding commenced by a foreign corporation, its successor, or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the court shall further stay the proceeding until the foreign corporation or its successor obtains the certificate.

D. If a foreign corporation transacts business in the Commonwealth without a certificate of authority, each officer, director and employee who does any of such business in the Commonwealth knowing that a certificate of authority is required shall be liable for a penalty of not less than $500 and not more than $5,000. Any such penalty may be imposed by the Commission or by any court in the Commonwealth before which an action against the corporation may lie, after the corporation and the individual have been given notice and an opportunity to be heard.

E. Notwithstanding subsections A and B, the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in the Commonwealth.

F. Suits, actions and proceedings may be begun against a foreign corporation that transacts business in the Commonwealth without a certificate of authority by serving process on any director, officer or agent of the corporation doing such business, or, if none can be found, on the clerk of the Commission or on the corporation in any other manner permitted by law. If any foreign corporation transacts business in the Commonwealth without a certificate of authority, it shall by transacting such business be deemed to have thereby appointed the clerk of the Commission its attorney for service of process. Service upon the clerk shall be made in accordance with § 12.1-19.1.

Overall Summary for Washington

There are no statutes defining what is “transacting business” in Washington, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Washington are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Wash. Rev. Code Ann. § 23B.15.010. Authority to transact business required.

(1) Unless it is otherwise authorized to transact business pursuant to a state or federal statute, a foreign corporation may not transact business in this state until it obtains a certificate of authority from the secretary of state.

(2) The following activities, among others, do not constitute transacting business within the meaning of subsection (1) of this section:

(3) The list of activities in subsection (2) of this section is not exhaustive.

Penalties of Not Registering a Foreign LLC

Wash. Rev. Code Ann. § 23B.15.020. Consequences of transacting business without authority.

(1) Unless it is otherwise authorized to transact business pursuant to a state or federal statute, a foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(4) A foreign corporation which transacts business in this state without a certificate of authority is liable to this state, for the years or parts thereof during which it transacted business in this state without a certificate of authority, in an amount equal to all fees which would have been imposed by this title upon such corporation had it applied for and received a certificate of authority to transact business in this state as required by this title and thereafter filed all reports required by this title, plus all penalties imposed by this title for failure to pay such fees.

Overall Summary for West Virginia

There are no statutes defining what is “transacting business” in West Virginia, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in West Virginia are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

W.Va. Code Ann. §31D-15-1501. Authority to transact business and jurisdiction over foreign corporation.

(a) A foreign corporation may not conduct affairs in this state until it obtains a certificate of authority from the Secretary of State.

(b) The following activities, among others, do not constitute conducting affairs within the meaning of subsection (a) of this section:

Maintaining, defending or settling any proceeding;
Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
Maintaining bank accounts;
Selling through independent contractors;
Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
Creating or acquiring indebtedness, mortgages and security interests in real or personal property;
Securing or collecting debts or enforcing mortgages and security interests in property securing the debts: Provided, that this exemption does not include debts collected by collection agencies as defined in subdivision (b), section two, article sixteen, chapter forty-seven of this code;
Owning, without more, real or personal property;
Conducting an isolated transaction that is completed within thirty days and that is not one in the course of repeated transactions of a like nature;
Conducting affairs in interstate commerce;
Granting funds or other gifts;
Distributing information to its shareholders or members;
Effecting sales through independent contractors;
The acquisition by purchase of lands secured by mortgage or deeds;
Physical inspection and appraisal of property in West Virginia as security for deeds of trust, or mortgages and negotiations for the purchase of loans secured by property in West Virginia;
The management, rental, maintenance and sale or the operating, maintaining, renting or otherwise dealing with selling or disposing of property acquired under foreclosure sale or by agreement in lieu of foreclosure sale;
Applying for withholding tax on an employee residing in the State of West Virginia who works for the foreign corporation in another state; and
Holding all, or a portion thereof, of the outstanding stock of another corporation authorized to transact business in the State of West Virginia: Provided, That the foreign corporation does not produce goods, services or otherwise conduct business in the State of West Virginia.

(d) A foreign corporation is deemed to be transacting business in this state if:

The corporation makes a contract to be performed, in whole or in part, by any party thereto in this state;
The corporation commits a tort, in whole or in part, in this state; or
The corporation manufactures, sells, offers for sale or supplies any product in a defective condition and that product causes injury to any person or property within this state notwithstanding the fact that the corporation had no agents, servants or employees or contacts within this state at the time of the injury.

(e) A foreign corporation’s making of a contract, the committing of a manufacture or sale, offer of sale or supply of defective product as described in subsection (d) of this section is deemed to be the agreement of that foreign corporation that any notice or process served upon, or accepted by, the Secretary of State in a proceeding against that foreign corporation arising from, or growing out of, contract, tort or manufacture or sale, offer of sale or supply of the defective product has the same legal force and validity as process duly served on that corporation in this state.

Penalties of Not Registering a Foreign LLC

W.Va. Code Ann. §31D-15-1502. Consequences of transacting business without authority.

(a) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any circuit court in this state until it obtains a certificate of authority.

(b) The successor to a foreign corporation that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any circuit court in this state until the foreign corporation or its successor obtains a certificate of authority.

(c) A circuit court may stay a proceeding commenced by a foreign corporation, its successor or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the circuit court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.

(d) A foreign corporation which conducts affairs or does or transacts business in this state without a certificate of authority is liable to this state for the years or parts of years during which it conducted affairs or did or transacted business in this state without a certificate of authority in an amount equal to all fees and taxes which would have been imposed by this chapter, or by any other provision of this code, upon the corporation had it duly applied for and received a certificate of authority to conduct affairs or do or transact business in this state as required by this article and had filed all reports, statements or returns required by this chapter or by any other chapter of this code, plus all penalties imposed for failure to pay any fees and taxes.

Overall Summary for Wisconsin

There are no statutes defining what is “transacting business” in Wisconsin, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Wisconsin are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Wis. Stat. Ann. § 180.1501 Authority to transact business required.

(1) A foreign corporation may not transact business in this state until it obtains a certificate of authority from the department.

(2) Activities that for purposes of sub. (1) do not constitute transacting business in this state include but are not limited to:

Penalties of Not Registering a Foreign LLC

Wis. Stat. Ann. § 180.1502 Consequences of transacting business without authority.

(1) A foreign corporation transacting business in this state without a certificate of authority, if a certificate of authority is required under s. 180.1501, may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(2) Neither the successor to a foreign corporation that transacted business in this state without a certificate of authority, if a certificate of authority was required under s. 180.1501, nor the assignee of a cause of action arising out of that business may maintain a proceeding based on that cause of action in any court in this state until the foreign corporation or its successor obtains a certificate of authority.

(3) A court may stay a proceeding commenced by a foreign corporation, its successor or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.

(4) The failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or its title to property in this state or prevent it from defending any civil, criminal, administrative or investigatory proceeding in this state.

(5)

(a) A foreign corporation that transacts business in this state without a certificate of authority, if a certificate of authority is required under s. 180.1501, is liable to this state, for each year or any part of a year during which it transacted business in this state without a certificate of authority, in an amount equal to all of the following:

All fees and other charges that would have been imposed by this chapter on the foreign corporation had it duly applied for and received a certificate of authority to transact business in this state as required by s. 180.1501 and thereafter filed all reports required by this chapter.
Fifty percent of the amount owed under subd. 1. or $5,000, whichever is less.

(b) The foreign corporation shall pay the amount owed under par. (a) to the department, and the department may not issue a certificate of authority to the foreign corporation until the amount owed is paid. The attorney general may enforce a foreign corporation’s obligation to pay to the department any amount owed under this subsection.

Overall Summary for Wyoming

There are no statutes defining what is “transacting business” in Wyoming, although there is a statute defining what is NOT “transacting business” in the state. The penalties for transacting business without registering in Wyoming are: fines, cannot bring a lawsuit in the state, although your contracts are enforceable.

What Does NOT Constitute Transaction of Business

Wyo. Stat. Ann. § 17-16-1501. Authority to transact business required.

(a) A foreign corporation may not transact business in this state until it obtains a certificate of authority from the secretary of state.

(b) The following activities, among others, do not constitute transacting business within the meaning of subsection (a) of this section:

(d) A foreign corporation, foreign limited partnership or foreign limited liability company which is either an organizer, a manager or member of a company is not required to obtain a certificate of authority to undertake its duties in these capacities.

Penalties of Not Registering a Foreign LLC

Wyo. Stat. Ann. § 17-16-1502. Consequences of transacting business without authority.

(a) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

(d) A foreign corporation which transacts business in this state without a certificate of authority shall be liable to this state, for the years or parts thereof during which it transacted business in this state without a certificate of authority, in an amount equal to all fees and license taxes, plus interest of eighteen percent (18%), which would have been imposed by law upon such corporation had it duly applied for and received a certificate of authority to transact business in this state as required by this act and thereafter filed all reports required by law, and in addition shall be liable for a penalty in the amount of five thousand dollars ($5,000.00), reasonable audit expenses and reasonable attorney fees. The secretary of state may refuse to issue a certificate of authority until all taxes, fees, interest, expenses and penalties due under this section have been paid to him. The attorney general may collect all penalties and other sums due under this subsection.

Author: Larry Donahue

Follow Larry Donahue on

20 Comments

Bob says:

Mar 7, 2019 at 11:31 am

Larry,
Quick question, I am starting a business where I will be an LLC-scorp. I will have no employees and will only have a physical presence in my home state. I will have an eCommerce website strictly selling toys and shipping them by common carrier into other states and will have no banks, employees or anything in other states just my home state. Do you know which states I will have to (if any) I will have to foreign qualify with? I read the federal law of interstate commerce should prevent me from other states from taxing me?

Reply
1. Larry Donahue says:
  
  Mar 7, 2019 at 12:02 pm
  
  Hi,Bob.
  
  Thank you for your question, which seems like such a simply question to answer. The problem is, it’s a very difficult question to answer for the following reason: Each state has its own laws pertaining to “purposeful availment” of a state, and because I’m only licensed in New Mexico and Illinois, I really cannot tell you as a matter of law for any state but those two.
  
  Even for those two states, you haven’t given me enough information to give you a good answer (believe it or not). Physical presence isn’t the only test. If a significant percentage of your customers are located in a particular state, that state could argue you’re “purposefully availing yourself” of that state. If you’re directly advertising or marketing in a particular state, that state could also argue you’re “purposefully availing yourself” of that state.
  
  I do think it’s safe — for the time being — to say if your customers are evenly distributed across all states in the US, you’re probably okay in not having to foreign register your company anywhere.
  
  You did bring up tax issues, but you didn’t specify income versus sales tax. I think income tax is related to the foreign filing requirement we discussed above — meaning that if you are not purposefully availing yourself of a state, such that you would be required to foreign file your company in that state, then you wouldn’t have an income tax issue in such states.
  
  For sales tax, that’s a different issue entirely. Take a read of the latest South Dakota v. wayfair decision by the US Supreme Court. States can now demand that out-of-state vendors who sell products or services in their states, are subject to collecting sales tax and paying it. And as you can imagine, states are moving quickly.
  
  Larry.
  
  Reply
  1. Bob says:
    
    Mar 7, 2019 at 12:22 pm
    
    Thanks for replying Larry! I am actually on in queue right now with Illinois to ask this question haha.
    
    I done tons of research on sales tax which I feel comfortable enough to answer on my own for each state but I am specifically talking about having to register to file any forms or file corporate taxes or anything besides sales tax since I am an LLC-scorp shipping items into the state. All my orders will be spread out over the 50 states so I would not have a large portion of my business in one state. The only advertising I will do is on google shopping and email marketing. So customers will search for my products see my ad and other competitors then place the order on my website and then I ship by common carrier to them.
    
    I read federal govt has a “interstate” commerce law and I don’t know how that applies…
    
    Reply
    1. Larry Donahue says:
      
      Jun 25, 2019 at 5:28 pm
      
      Hi, Bob.
      
      I don’t think you need to worry about income tax issues at this time, except for those states you are “transacting business in,” which means those states you need to register your company in.
      
      Larry.
      
      Reply
TJ says:

Mar 9, 2019 at 1:27 pm

I am in the same boat as this other poster and have been researching this topic with the new sales tax laws. I figure they will eventually start making out of state businesses start paying some kind of income tax. I have an online business shipping into all 50 states but am a sole prop….. do any states require remote sellers with no nexus in their state (minus sales tax, I am familiar with those laws) to file with them for any reason if they are a sole prop?

Reply
1. Larry Donahue says:
  
  Jun 25, 2019 at 5:26 pm
  
  Hi, TJ.
  
  Are you asking about income taxes? If so, I’m not aware of any states that do this, and currently, the Sup. Ct. decision on sales tax is very limited in scope, and doesn’t address income taxes.
  
  Larry.
  
  Reply
OD says:

May 21, 2019 at 11:48 am

Very grateful for your website and the articles you write, Larry. My question is similar to the one from “Bob” but the difference is in what my “product” is–like Bob, I have no employees and only have a physical presence in my home state. Unlike Bob, instead of selling & shipping products my business will (initially) provide website & software design/development services.
I already have my first customer ready to receive services as soon as my company is registered, and the customer resides in a different state. Going forward I expect to have more customers residing in different states; do you think it would be necessary to register my company as a foreign LLC in whatever state I have customers, though my company isn’t technically selling/shipping products?

Reply
1. Larry Donahue says:
  
  Jun 25, 2019 at 4:56 pm
  
  Hi, OD.
  
  Before I answer, please understand that every state has its own rules about this, so it’s impossible for me to give you a very specific and accurate answer that will hold up in all circumstances.
  
  With that said, if you are “purposefully availing” yourself of a particular state, you’re going to need to register as a Foreign LLC. What does that mean? Again, each state has its own rules around this although there are court cases that do put some rules around this (I won’t dive into those court cases), but I’ll give you some general guidelines.
  
  First, if you’re specifically marketing your services into a specific state or attempting to sell to specific residents of a state, then you’re “purposefully availing” yourself of that state.
  
  Second, if a significant percentage of your customers tend to be in a particular state, you’re probably “purposefully availing” yourself of that state. What is a significant percentage? Depends, but I would say 25% or more is a good rule of thumb.
  
  Third, even if you’re not specifically marketing your services into a specific state, but you are providing services that appeal to specific states or their residents, you would be “purposefully availing” yourself of that state.
  
  Finally, if you hire any W2-based employees in a particular state, you are “purposefully availing” yourself of each state you have a W2-based employee.
  
  Larry.
  
  Reply
Rich says:

Aug 16, 2019 at 6:57 pm

Very, very informative website, wish I would of found awhile back. I’ve Googled until my fingers hurt on finding out something … thought I’d give a shout out. I have an LLC in California – I also have (2) DBA’s under that LLC. Now I’ve filed a foreign Qualification in Georgia so I can do Biz and have protection. My question .. are the DBA’s A) protected in Georgia?
Thanks

Reply
1. Larry Donahue says:
  
  Aug 19, 2019 at 3:43 pm
  
  Hi, Rich.
  
  DBA’s you use in CA are irrelevant for GA purposes, unless (1) you have some sort of federal protection (i.e. trademark) or (2) you file those DBA’s in GA.
  
  Larry.
  
  Reply
Lee says:

Jan 28, 2020 at 7:37 pm

Hi Larry,
I appreciate your site and information.
I created a consulting business (single owner LLC) in WI before leaving to Michigan this past December. I have a registered agent in WI and am now perplexed about what to do in MI. Due to having a great consulting gig from the WI EIN number in which I would have to re-bid if I continue working for this business, do I form a foreign entity in Michigan to ensure I keep this opportunity?
I no longer have my own physical presence in Wi except for the registered agent. Thoughts?
Thanks,
Lee

Reply
1. Larry Donahue says:
  
  Jan 31, 2020 at 3:27 pm
  
  Hi, Lee.
  
  Thank you for your question.
  
  I think you have a number of options at your disposal to maintain your existing FEIN. The best option is to actually domesticate your WI LLC in MI. You can learn more about this, see pricing and order with the following link: https://www.l4sb.com/product/move-llc-to-different-state/?target-state=Michigan&domestic-state=Wisconsin.
  
  The advantage with Domestication, is that your WI LLC actually becomes a MI LLC and is no longer registered in WI. This means no more reporting in WI. No taxes to report. Nothing.
  
  The other option is to foreign file your WI LLC in MI, which means your LLC is “doing business” in both WI and MI, even if there is little to no business being conducted in WI anymore. We can do this for you for a low, flat-rate fee. Use the same link above, just select “Foreign LLC” instead of “Domestication”.
  
  What’s the difference? Domestication actually moves the LLC itself. Foreign LLC registration means the LLC is still domesticated in WI, but also doing business in MI. This MAY BE OKAY if your LLC is being taxed as a disregarded entity (although I am unfamiliar with the laws of WI, so I cannot tell you whether you have other legal requirements, like annual reports or sales taxes). This will be a pain, if your LLC is taxed any other way. For example, if your LLC is taxed as a S-Corp, you’ll usually still need to submit a partnership return in both WI and MI, even though S-Corp is a pass-through entity.
  
  Clear as mud? Larry.
  
  Reply
Tim says:

Feb 19, 2020 at 9:39 am

Hi Larry,

I’m looking to create an LLC for an internet-based business. I’m in Illinois, but taxes here make filing in Delaware or Nevada attractive. The only work I expect to do in IL would be:
– Have a bank account
– Maintain website information from home
– Coordinate orders/shipments from the manufacturer.
This all appears to be fine and allowed without filing a foreign LLC declaration for IL.

If I expand and want to rent local storage facilities to hold stock on hand, is this now transacting business and requires a foreign LLC filing?

What if I fill orders and ship from IL to locations across the US? (I will not have a physical sales location, nor do I think my business will get a high percentage of IL customers.)

Last, does filing a foreign LLC in IL mean that I need to pay IL state tax for business income?

Thank you!

Reply
1. Larry Donahue says:
  
  Feb 19, 2020 at 1:34 pm
  
  Hi, Tim.
  
  It’s hard to give you a black-and-white rule here, on when you are versus “are not” conducting business in IL. I will say, the general rule is that states are getting wise to “Internet only” companies and are working to create laws and rules that permit them to tax their residents who are conducting business on the Internet. The State of California is an example of a very aggressive state doing this. IL isn’t too far behind.
  
  I can say that if you have one or more W2 employees (including yourself) in IL, or your company has its “base of operations” in IL, then the State of Illinois says you’re “doing business in Illinois.” Do some of the activities you’ve listed rise to the level of having a “base of operations?” Sounds like it. Coordination, maybe. Drop shipping, definitely.
  
  But, let’s make sure we have our eyes on the right issue. You said “taxes here make filing in Delaware or Nevada attractive.” I assume you mean income taxes, correct? Sales taxes are a completely different issue, and where your company is filed will be irrelevant from a sales tax perspective.
  
  So, if you really mean income taxes, then let’s explore that a bit. A LLC has 4 different tax options: Disregarded, Partnership, S-Corp and C-Corp.
  
  Of those 4 tax options, Disregarded, Partnership and S-Corp, are called “pass-through” entities. Only C-Corporation is the only tax status that is taxed at the state level. The pass-through entities pass their profits and losses on to the owners, and the owners then report that income on their personal taxes, to pay state and income tax personally depending on the state they live in.
  
  If you want to tax your company as a C-Corporation, it creates the opportunity for double-taxation — so most small businesses do not elect for C-Corp tax treatment. Instead, pass-through is the norm. If that’s true, then you’re not going to see any tax savings by forming in another state.
  
  Larry.
  
  Reply
Liz says:

Mar 1, 2020 at 7:37 pm

Hello,

My husband and I have a joint LLC in Florida, however, and we work as independent auto appraisers, so we work in various states. Do we need to register or file for a foreign LLC in every state that we work in? Although we’re independents, we get our work through appraisal firms and they tell us where we work and they pay us for our work.

Reply
1. Larry Donahue says:
  
  Mar 4, 2020 at 11:12 am
  Hi, Liz.
  
  Unfortunately, this is a difficult question to answer. Every state has its own laws on this, so it depends on what you’re doing, where you’re doing it, and a few other factors (i.e. frequency, percentage of business in a state, etc).
  
  I can give you some guidelines, but none of these are determinative. You really need to consult with a local attorney in the state (or states) where you think you may have a problem.
  - Is 20% or more of your work in a particular state? This argues you’re “doing business” in such a state, and probably should register.
  - Do you need to hire W2 employees in any particular state? Need to register.
  - Do you have a base of operations in a state, renting, leasing or otherwise “purposefully availing” yourselves in a particular state? May need to register.
  It’s very difficult to give you a specific checklist, unfortunately.
  
  Larry.
  Reply
Jerry says:

Jun 24, 2020 at 1:44 pm

Larry,

Thanks for this site. The information you provide is most helpful. My question relates to Illinois regarding the provision regarding “not considered transacting business” if the contract requires execution outside the State of Illinois. I have a company that provides SaaS (software applications) that are accessed within the state but servers located in a completely different state and the Agreement executed outside of the state. No software is delivered to the user, just access to the software which incurs a periodic fee. Do I need to register in Illinois?

Reply
1. Larry Donahue says:
  
  Jun 24, 2020 at 1:50 pm
  
  Hi, Jerry.
  
  I really don’t have enough information here to give you a good answer. You need to look at the totality of the circumstances, and if ANY of the following is true, you’re probably “transacting business” in IL even if you don’t want to:
  
  – Paying W2 wages to any IL resident, including yourself
  – Using IL as a “base of operations” for your business, even if servers and your SaaS-based User Agreement references another state as the jurisdiction for the agreement
  – A “significant” percentage of your customers/clients are located in IL — “significant” meaning somewhere in the range of 20% to 25% or more of your clients are IL-based
  
  Larry.
  
  Reply
NM says:

Apr 21, 2022 at 4:12 am

Hi Larry,

Thank you for your excellent website and community. I have 2 questions, for an LLC I have recently formed. Question 2 has a caveat.

1. I registered with Delaware, as a small business LLC with consulting services (all service classifications, incl. admin, internal office services etc.). I am based out of, and operating in California. Will I need to register as a foreign LLC?

2. I purchased services from LegalZoom, which was a huge mistake. They filed the incorrect name and although this was caught in the first couple days, the team ignored and continued all add-ons under the incorrect name (now requesting to charge a few more hundred to correct their mistake). Since business has not started, and hundreds was spent on an entity name I cannot use (domain and website were setup prior)

2A. Would it be better for me to pay the amendment/correction fees with the Secretary of State, or would it make more sense to close the LLC that had not started and initiate a new one with a different service (e.g. ZenBusiness) at a lower cost?

2B. Would either option in 2A have a more positive or negative effect, operating out of California while registered in Delaware (and Foreign LLC filing, if determined appropriate)?

Note: I have not started business yet, and the name of my domain and preliminary website are being used for a proposal I have delayed while figuring out how to rectify the LegalZoom fiasco

Thank you.

Reply
1. Larry Donahue says:
  
  May 18, 2022 at 3:53 pm
  
  Hi, there.
  
  Answers are:
  
  1. Probably. Read what the California Franchise Tax Board says about “doing business” in California. If you meet one of the legal tests, you need to register your DE company in CA.
  
  2. Sorry about your experiences with LegalZoom. Not trying to defend them, because they are competitors of ours, but we’ve run into similar issues: A client wanted a very specific name with punctuation, only to be accepted by the state but not by the IRS. But, if it was their mistake, they certainly shouldn’t be charging you to clean up their mistakes. If we screw up, our job is to fix them — without charge to the client.
  
  2A. This is hard to answer, except I wouldn’t refer you to ZenBusiness — I would refer you too us. ZenBusiness, like LegalZoom, are what we call in the business “unlicensed legal providers,” so really just push forms around and cannot offer or provide solid legal assistance. With that said, hard to answer this question. The answer lies in which is less expensive to deal with, and you said you had domain names, a DE LLC, etc, so it sounds like it would be better to get the name right with the CA SOS.
  
  2B. I’m not sure how to answer this question. Clearly one option will be better financially, and that’s what’s hard for me to predict for you. From a legal perspective, either option is equivalent assuming you’re consistent across the board.
  
  Good luck. Larry.
  
  Reply

Start Your Business

Manage Your Business

Grow Your Business

Definition

When to Register a LLC as a Foreign LLC

Overall Summary for Alabama

Penalties of Not Registering a Foreign LLC

Overall Summary for Alaska

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Arizona

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Arkansas

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for California

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Colorado

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Connecticut

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Delaware

Penalties of Not Registering a Foreign LLC

Overall Summary for District of Columbia

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Florida

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Georgia

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Hawaii

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Idaho

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Illinois

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Indiana

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Iowa

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Kansas

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Kentucky

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Louisiana

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Maine

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Maryland

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Massachusetts

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Michigan

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Minnesota

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Mississippi

What Does NOT Constitute Transaction of Business

Penalties of Not Registering a Foreign LLC

Overall Summary for Missouri

What Does NOT Constitute Transaction of Business