If Your Company Was Formed in One State and Does Business In Another, You May Need Foreign Registration
Go West… Or North, or South, or East…
But complete a Foreign Registration before doing business.
Foreign registration, also called out-of-state registration, is the process required for a company formed under the laws of one state doing business in another and requiring it to be registered in the other.
Here’s a clear example: if you and your company are set up in New York, but want to do business in Texas, you may be required to complete foreign registration.
Although the actual requirements vary from state to state, they typically apply to any and all business entities, including S-Corps, LLCs and even trusts!
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What are some of the requirements for Foreign Registration in Texas?
In Texas, the requirements for Foreign Registration are pretty straightforward. For example, the name your company operates under must:
- Reflect a recognized entity type, such as an LLC, Series LLC, Limited Partnership, etc.
- Not reflect or imply that your company is engaged in a business it’s not authorized to pursue
- Be a name that’s not the same as, or deceptively similar to, the name of any existing domestic or foreign filing entity
- Not be any name reservation, or registration filed, with the secretary of state (That’s not to say you can’t use a similar name with consent.)
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What if the name doesn't meet the requirements?
The good news is, even if you were unable to meet these requirements, you’d still have some wiggle room.
One option might be to register your entity under a fictitious name, kind of like a legal pen name, or “nom de plume.” Although it might surprise you to learn this tactic is 100% legal, Texas’ Secretary of State actually advises this course of action.
Since there are serious penalties for not registering, you really want to have your Foreign Registration completed before conducting business in a new state. If you don’t, you could be slapped with late filing fees, which can be very costly if your out-of-state registration isn’t set up correctly.
Don’t Go It Alone
There are other nuances, which of course vary by state law. Don’t go it alone!
For more information on how we can help you with your foreign or out-of-state registration, contact Royal Legal Solutions today. We’ll evaluate your situation and help you make the best choice for your circumstances.
Give us a call, and we’ll set you up with a consultation.
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We have experience in setting up the proper asset protection and making it easy for an investor to use. Our system simplifies management structure as much as possible, and we also use common sense to ensure your needs are met. For example, just one tip we give our clients is that you don’t need multiple bank accounts as long as you have accurate accounting records. For taxation, they should stay exactly how they are now while being reported on a Schedule E of your personal return (if you’re an individual/married partners) or a partnership return (if unmarried partners).
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