Can I Register My LLC in a Different State?

Small business owners have increasingly become the backbone of the American economy. Entrepreneurs often confront a common question when setting up their business structure: can I register my LLC in a different state?

The procedure of registering a company out of state is not easy. There are several requirements and compliance issues that you need to consider. This article aims to clarify this question for small business owners and budding entrepreneurs.

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Understanding the Difference: Domestic LLCs vs. Foreign Entities

If your LLC is set up in the place where you operate, such as your home state, it’s known as a domestic LLC. However, if you wish to do business in a new state other than your home state, your LLC becomes a foreign entity in that new state. For instance, if you formed an LLC in Texas but want to do business in California, your LLC would be a domestic entity in Texas and a foreign entity in California.

Alternatively, if you registered an LLC in one state, such as Delaware, for its favorable corporate laws but operated in another state, such as Pennsylvania, you will have to file in Pennsylvania as a foreign LLC and pay all applicable Pennsylvania taxes and fees.

Can I Register My LLC in a Different State?

Yes. You can register your LLC in a different state if you comply with the laws and regulations of both states, the one where you register and the one where you have a physical presence.

Why Register in a Different State?

Some entrepreneurs may find a better business location or lucrative real estate opportunities in a different state. It may be strategically beneficial to have your LLC registered in such states. Different states have varying tax rates and regulations. States like Delaware or Nevada are popular for their business-friendly policies. 

Small business owners often consider state income tax, state tax, and other federal taxes overseen by the Internal Revenue Service (IRS) when deciding where to operate their business.

If your desired business name is taken in your home state, registering in a new state might allow you to use that name. For this reason, some business owners choose to register their business in a different state.

However, if you register your domestic LLC in another state and operate in both, you are responsible for taxes and complying with state laws in both jurisdictions. You must pay taxes where you are physically located and earn revenue.

What Are the Requirements of a Foreign LLC?

If you decide to register your LLC as a foreign LLC, you must file for a certificate of authority and pay the required registration fees. Depending on the state, you may also need to pay state taxes like corporate and franchise taxes.

Registering Your Business in State vs. Out of State

The following table compares the implications of registering your business in-state versus out-of-state:

How To Register an LLC in a Different State

Before forming an LLC, ensure your chosen business name is available in the new state. It should be unique and distinguishable from existing names in the secretary of state’s database. State law often requires businesses to appoint a registered agent in the state where they’re operating. This agent receives official papers and legal notifications on behalf of your LLC.

If you want to create an LLC, you file Articles of Organization with the secretary of state.

For LLC registration as a foreign LLC, you file a Certificate of Authority with the secretary of state in the new state. With the certificate of authority, you may have to provide a certificate of good standing from the domestic LLC’s state. There’s typically a filing fee associated with this, which varies by state. You will also want to get an employer identification number (EIN) from the IRS. This number is crucial for tax purposes. It’s akin to a social security number but for your business.

You will also need to get a business license, depending on the nature of your business and the state you register in. Most states require businesses to have a business license to operate legally. 

While not always mandatory, you might also consider drafting an operating agreement. An operating agreement outlines the internal operations of your LLC. It’s beneficial for clarifying roles and responsibilities within your business. For more information, visit FindLaw’s Checklist for Starting a Limited Liability Company (LLC).

States Considered Business-Friendly for Foreign LLCs

Most people consider the following states beneficial for out-of-state businesses to register:

• Delaware: Over one million corporations are incorporated in Delaware. Companies choose Delaware as a haven for LLC formation because Delaware has an advanced and flexible General Corporation Law. Delaware also has low initial filing and franchise fees, assistance for new business owners, and highly accommodating business entity laws.

• Wyoming: Registering your business in Wyoming has a number of advantages, including no state income taxes, low start-up costs, and no U.S. citizenship requirements.

• Nevada: Registering your business in Nevada has numerous advantages, including no commerce tax (on annual net revenue below $4 million) or corporate income taxes, low registration fees, and strong privacy protection for business owners.

Consult an Attorney if You Are Planning To Register Your LLC Out of State

If you plan on registering your LLC outside of the state where the LLC conducts its business, you need to comply with the laws of both states. Therefore, it is important to consult a business law attorney in both states to ensure your LLC runs smoothly. They will understand your type of business and offer sound legal advice, especially if you plan to register in multiple states.