What is a Foreign Corporation?

It is typically advisable for a company to incorporate in the state in which it will do business. Sometimes, however, this is not possible, as many corporations offer services to individuals and businesses in several different states.

A foreign corporation is a business that does business in states other than the one in which it is incorporated. A foreign corporation often incurs more fees and taxes than corporations that confine their business practices to one state, and the documentation can be extensive.

The qualifications and documentation for foreign corporations will vary from state-to-state, which means that extensive research will be required to ensure that you are meeting all of the necessary laws. In most cases, you will have to register a Foreign Corporation Certificate with the Secretary of State for every state in which you conduct business.

The document will probably solicit the following information:

– Name of the Corporation
– Names of all Directors & Officers
– Address of the Principle Office
– Addresses of all Locations in Foreign State
– Name & Address for Agent for Service of Process

In some cases, you will have to provide additional information, including assets and liabilities, and there is typically a nominal filing fee. Some states also require a Certificate of Good Standing, which is authorized by a state official in the state in which the company was incorporated, and certifies that the corporation does business in that state and has legal documentation.

If a foreign corporation fails to meet the requirements of any state in which it conducts business, the corporation itself as well as its agents and officers will be liable for a number of fees and other penalties. For example, if your foreign corporation does not file the necessary paperwork in California, the state might rule that contracts are no enforceable in the state of California.

Taxes are also a significant worry for foreign corporations, because the laws governing taxes are different from state-to-state, and it is the responsibility of the foreign corporation to obtain all of the necessary tax information and to pay it accordingly.

A foreign corporation might need a corporate attorney to handle all of these extraneous regulations and to ensure its legal business in whatever states it chooses to operate in. Although corporate lawyers can be expensive, it is much better than the legal ramifications of failing to comply with legal statutes in various states.

For more information about the necessary documentation for a foreign corporation, visit LegalZoom or contact your local incorporation office.