Foreign Qualification: Glossary Definition
Definition of Foreign Qualification:
Also commonly referred to as “foreign registration.” A corporation or limited liability company (LLC) is considered a “domestic” entity in its state of incorporation or formation. If the company transacts business in any other state(s), it must qualify or register in such state(s) “to do business,” where it will then be considered a “foreign” corporation or LLC.
Each state has its own tests to determine if foreign qualification is required. Generally, if a business has substantial or continuous contacts within a state, then qualification or registration is likely required.
These factors could include:
- having employees in the state
- having a real estate lease and office in the state
- having a bank account in the state
- having an automobile registered in the state
- acting as manager of an LLC
