Why Register a Foreign Corporation in California or Any Other State
First of all, you have to. It is illegal to conduct business in a state where you’re not registering. You open your business up to civil liability if you do so. A corporation that establishes in another country is considered a foreign corporation in another country. When you want to do business in that other state, you have to do a foreign entity registration. This process is called Foreign Qualification.
The Benefits of Foreign Entity Registration
So, yes, register your company before conducting anything outside of your state of incorporation. Do this before you perform any business to avoid legal headaches. Here are more benefits when you register a foreign corporation.
Obtain Legal Protection When You Register a Foreign Corporation
So, first of all, with foreign entity registration, you get the legal protection that is according to local corporations.
These allow you to conduct business within the foreign state confidently. You don’t have to be looking over your shoulders all the time. You don’t have to worry about getting sued wrongfully. Inversely, you can sue anyone or any entity that does your corporation wrong.
For states like California, getting this started means just completing your Certificate of Qualification. With this document, you are accorded legal corporate status in the said state.
When Should You Accomplish Your Foreign Entity Registration
One typical question that comes out about registering as a foreign corporation is when you should do. What qualifies as doing business in another state?
For this one, please refer to this short list of what qualifies as doing business as a foreign corporation.
- When should you consider foreign entity registration?
- Before you start doing any business out of your state – knowingly or otherwise.
- You have employees in a foreign state.
- Your corporation uses a physical address in the foreign state.
- You have company assets in the state.
- You get and accept orders from the state.
- Your corporation maintains a bank account within the said state.
Register a Foreign Corporation for Tax Purposes
When you do business in another state, you will have tax obligations in that state. There are no ifs and buts about it. Skipping your tax obligations is not only illegal. You also open yourself to more significant hassles in the future. Plus, you can jeopardize your position in the state. The state can forbid you from doing business there in the future.
Register your business and pay taxes. It is not something we In California, for instance, you have to pay income tax, franchise tax, and a privilege tax.
And, Of Course, With A Foreign Entity Registration, You Can Freely Do Business Within The State
Finally, the ultimate benefit and reason why you should register a foreign corporation are that it gives you the freedom to conduct within the international state. Sell your product and services legally when you register. And, should someone or another business dupe you or do you wrong, you can sue.
This freedom, ultimately, is what you want for your corporation.