When to register a foreign LLC in Texas

When to register a foreign LLC in Texas

If you have an LLC established outside of Texas and the LLC does business in Texas, you must file an "Application to Register Foreign LLC" (TXSOS Form 304) with the Texas Secretary of State within 90 days of the first business transaction in Texas.

All foreign LLCs are granted a 90 day grace period to register with the secretary of state after their first business transaction in Texas. Failure to register during the grace period will result in a financial penalty equal to the total amount of unpaid fees and taxes plus additional interest and late filing costs. However, missing the filing deadline will not void any significant legal agreements made in the state or prevent your LLC from defending a lawsuit in Texas.

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.

The requirement that you register an LLC outside of its home/formation state ensures that the business will fulfill regulatory and tax obligations in every state in which they do business.

What activities require foreign LLC registration in Texas?

Unfortunately, it is not entirely clear what kinds of activities would constitute "transacting business in Texas." Section 9.251 of the Texas Business Organizations Code does provide a list of activities that would NOT be transacting business in Texas and thus would NOT require registration as a foreign LLC in Texas. The list is long, but the most common activities that would NOT require registration are (1) having a bank account in Texas; (2) transacting business in interstate commerce (through Texas); (3) conducting an isolated transaction in Texas; or (4) owning, without more, assets in Texas.

Ramifications for failure to register as a foreign LLC in Texas

An LLC formed outside of Texas may engage in certain limited activities in the state without being required to register (BOC § 9.251). However, a foreign LLC that fails to register when required to do so:

  1. may be enjoined from transacting business in Texas on application by the attorney general;
  2. may not maintain an action, suit, or proceeding in a court of this state until registered, and
  3. is subject to a civil penalty in an amount equal to all fees and taxes that would have been imposed if the entity had registered when first required.

Calculation of late fees

A LLC formed outside of Texas that has transacted business in Texas for more than ninety (90) days is subject to a late filing fee. The Secretary of State may condition the filing of the registration on the payment of a late filing fee that is equal to the registration fee ($750) for each year, or part of a year, that the entity transacted business in Texas without being registered. In other words, if you started doing business in Texas in the beginning of 2021 and formally registered as a foreign LLC in 2022, you would have to pay the $750 filing fee plus a late fee of $1,500 ($750 for both 2021 and 2022).
If you know you would like to hire us, you can use the following link to submit everything we'll need to register your out-of-state LLC in Texas. If you'd prefer to discuss first, you can get in touch with us via our contact form at your convenience.

Zachary Copp, Esq.

Attorney at Copp Law Firm, PC

Mr. Copp is a graduate of the University of Texas at Austin and the founder of the Copp Law Firm. He has been licensed in Texas for 20 years and has personally formed over 3,500 Texas LLCs since 2015. He was recognized as a Rising Star by SuperLawyers® for seven straight years. See full bio →

Leave a Reply

Your email address will not be published. Required fields are marked *