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| Home: Learn More: Foreign Qualification |
| Foreign
Qualification: What you Need to Know |
The word “foreign” can sometimes
cause confusion here. Many organizations misinterpret it to
mean business outside the United States, when actually it
simply refers to a U.S. state in which a particular organization
is not based.
As your business grows, you may want to begin conducting your
activity in other states – and that means you’ll
probably need to go through the process needed for foreign
qualification of your business in those states.
The first step in securing foreign qualification involves
gaining a certificate of authority. In addition to this, you
need to pay the necessary state fees. You may have to pay
fees and taxes both in the state of formation as well as in
the state of qualification.
This is in short registering your business within the boundaries
of the foreign state. This way, the state knows about your
business and grants you permission, and you also qualify for
certain basic amenities within the state borders. Along with
these, you are also bound by certain rules and regulations
What are the basic stipulations required for trading in another
state?
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1. The organization’s
physical presence in the state.
2. The presence of employees in the state.
3. The organization’s conducting activities in
the state.
4. The presence of a valid bank account in the state. |
Different states have various criteria that need to be fulfilled
before activities can begin.
Your organization may incur additional taxes, penalties and
fines for not notifying the authorities about your act ivies
conducted in the concerned state.
Note however, that if you form a new organization in the state
in which you wish to conduct activities, you won’t need
to foreign qualify your business, because your ‘new’
organization becomes a separate entity in each new state in
which you incorporate (and it also secures a physical presence
in these states). Bear in mind, however, that maintaining
bylaws, scheduling meetings annually and submitting minutes
to form corporate records are additional responsibilities.
Plus, every organization in each state may have separate officers
and directors; which may create a large amount of record keeping
requirements.
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| Since
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| For over 10 years, Patel & Alumit has been the trusted leader in obtaining 501c3 tax exemptions for our clients. Our experience is unparalleled and our commitment is to the thousands of clients whom we have had the privilege of serving. |
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