What is a foreign LLC?
A "foreign LLC" is the term used by one state to describe an LLC formed in another state. We sometimes refer to a foreign LLC as an out-of-state LLC. An LLC is considered "domestic" to the state in which it was formed and "foreign" to all other states.
You can learn more by reading our article titled "Foreign LLC vs Domestic LLC."
When should you register an LLC as a Foreign LLC?
If you have already formed an LLC in one state and wish to register to do business in another, you will need to register the LLC in the additional state as what the new state will call a "foreign LLC." For example, if you have a Nevada LLC and you do business in Texas, you would need to register the NV LLC in Texas as what Texas would call a "Foreign LLC".
Each state has its own laws governing who must register as a foreign LLC, as well as regulatory compliances and charges. It is important to note that all jurisdictions do not require official foreign LLC registration. You may obtain information on a chosen state by calling the state office in charge of entity registrations (typically the Secretary of State's Office).
Many states are similar to Texas and require an LLC (from another state) to be registered as a foreign LLC when they "do business" in that state. However, most states do not define what they consider "doing business" in their state, but rather they provide a long list of actions that are NOT considered "doing business." You can see the full list of actions that would NOT be considered enough to require registration as a foreign LLC in Texas in the Texas Business Organizations Code 9.251.
Why Seek Foreign LLC Status?
Should it be found that your company did business in a state where it was not legally registered, you may face considerable financial penalties, fees, and the voiding of any significant legal agreements made in the area.
States want every tax dollar they can get. So, if you are doing business outside of where your LLC was initially registered, you must register as a foreign LLC in that jurisdiction. You can reach out to the Copp Law Firm if you think your non-Texas LLC may need to be registered in Texas.
Ramifications of registering a Foreign LLC
Once you register as a foreign LLC in another state, you will need to comply with that state's reporting and maintenance requirements.
If, for example, you form/create an LLC in Nevada and this Nevada LLC does business in Texas. Once you register the NV LLC in Texas as a foreign LLC, you will have to (1) file an annual list in Nevada and (2) file an annual report in Texas.