Foreign Filing Explained
In this episode of Coffee with Carl, attorney Carl Zoellner explains what it means to foreign file business entities.
Updated November 3, 2020
Recently, I’ve received some questions about foreign filing business entities. So, let’s talk about it. First, what does “foreign filing” mean?
Foreign Filing Definition
Basically, “foreign filing” your business entity to do business in another state means filing the entity in a state other than where the entity was originally formed. First, you’ll need to know whether the entity’s activities qualify as “doing business.” Each state’s laws are a little different on this, so it’s important to look up the specific definition of “doing business” for the state in which you want to foreign file your entity.
If you look it up and determine that your business entity’s activities qualify as “doing business” in the new state, you’ll need to foreign file your entity with the new state. When you foreign file your entity in a state other than where the entity was formed, you’re basically giving the new state notice that you’re conducting business as an out-of-state entity in that state.
This additional step is not necessary for your parent companies, such as a Wyoming holding company. This is because each of the LLCs that your parent company holds should already be local LLCs filed within the state they’re doing business.
For instance, let’s say you live in Texas and own property in Florida. Before coming to Anderson Advisors, you set up a Texas LLC to hold that property. What you’ll find is that you should’ve made a Florida LLC instead. So, what you’ll do is foreign file the Texas LLC in Florida. This allows it to do business in a different state.
Sometimes, people can become hung up on the word “foreign,” which we usually think of in terms of outside the country. However, when we talk about “foreign filing,” it simply means in another state.
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Watch as Carl breaks down what it means to foreign file business entities.
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