Business Qualification

Posted by American Ltd on Nov 14, 2016 8:30:00 AM


Foreign Qualification

Do you know the difference between a “domestic” and “foreign” designation? Your company is considered a domestic entity only in the state in which it was formed. All other states consider your company a “foreign” entity.

Qualifying to do business in another state is required when you are conducting business in a state other than where you initially formed your business. This may happen as your company grows and you decide to expand it in order to service neighboring states. In other cases this happens because an individual decides for a number of reasons to form their company in a corporate friendly state like Delaware but plans to actually conduct business somewhere else. In this instance they can take advantage of Delaware laws and courts should they ever be sued, but qualify their business where they are actually located.

To do business in other states, you must file a Certificate of Authority. Without the proper foreign qualification, you can lose access to the state’s judicial system or even be hit with fines, back taxes and penalties.

You can file for foreign qualification with the state you are qualifying in, or opt to have a service company like American Incorporators can handle the paperwork and filing for you. Most states require an officer of the corporation or a member of the LLC to sign the qualification documents. Once the documents are signed and filed with the state, the company will be approved for business.

Doing Business As (DBA)

DBA is an abbreviation for “doing business as” – in some states and counties it may be referred to as a fictitious name or assumed name. Naming your business is the first step in the branding of your company. The name should let clients know what type of business you are.

If you have registered your Corporation or LLC and you decide that you would like to do business using a different name or you would like to have multiple names, you will have to file a DBA. If you are doing business under a different name other than your personal name, you will have to submit a filing with the proper authorities.

Some DBA’s are filed at the state level and some are filed at the county level, AIL can prepare and file your DBA in any state or county.

Topics: Corporations, State Basics, forming a business