A limited liability company formed in one of the fifty states in America can do business and own real estate in all of the other forty-nine states. If an LLC formed in state 1 wants to engage in business or own real estate in state 2, state 2 may require that the LLC register to do business in state 2. The registration process is usually simple – the LLC files a form in the other state and pays a filing fee.
The purpose behind requiring entities formed outside of a state to register to do business within a state is usually make it easy for the state to collect state taxes. States that have an income tax want companies formed out of the state to register to do business in the state so the state can be on the look out for the out of state LLC to file an income tax return and pay income taxes on income derived within the state’s borders.
Each state has its own definition of what constitutes doing business in the state. If an LLC formed in state 1 has an office or a single employee in state 2, state 2 will always require the LLC to register to do business in state 2. Some states (Arizona for example) do not consider the ownership of one parcel of real estate by an out of state company to be doing business in the state. Some states (California for example) deem ownership of a single parcel of land to be considered doing business in the state. Most states will say that an out of state company that owns two or more parcels of real property in the state is doing business in the state.
Once the LLC registers to do business in the other state, it must file an annual report and pay the state an annual fee. The annual fees vary from state to state. For example, Arizona does not require LLC formed outside Arizona and registered to do business in Arizona to pay an annual fee or file and annual report. California, however, requires an annual report and a minimum annual fee of $800. Tennessee’s annual fee is $50 for every member with a minimum of $300. This the same annual fee charged to LLCs formed in Tennessee.
Every state in the United States requires that companies formed within the state and companies that register to do business within the state appoint a resident agent (called a statutory agent in Arizona) to accept legal papers/documents served on the resident agent. The purpose for this law is so that anybody who wants to sue the company of give it legal notice of some type can easily determine the name and address of the resident agent in the state and then serve the legal papers/documents on the resident agent. Service of papers and documents on the resident agent is deemed by the law to be service/notice to the company.
When you file your application to register your LLC in another state, the application will require the LLC to give the name and address of its resident agent in the state. We recommend that you hire Northwest Registered Agent, LLC, to be your LLC’s resident agent for a relatively low annual fee of $125. This company provides registered agent services on all fifty states. Tell them KEYTLaw, LLC, referred you.
See “Registering to Do Business in Tennessee”