When Does a Business Need to Register in Another State?
You generally must register (foreign qualify) in a state when you're "transacting business" there. States don't define the term identically, but the patterns are consistent.
Activities that usually require registration
- Having an office, store, warehouse, or other physical location in the state
- Having employees who work in the state
- Owning or leasing property used in the business there
- Regularly meeting clients or performing services in the state on an ongoing basis
Activities that often don't, on their own
- Selling to customers in the state through interstate commerce, such as online or by mail
- Opening a bank account in the state
- Holding board or member meetings there
- An isolated transaction completed within a short period
- Defending a lawsuit in the state
Qualifying to do business and owing state taxes are separate questions. You can owe sales tax or income tax in a state (for example, from sales volume) even if you don't have to foreign qualify there.
Related service: Business Registration Services →