What is a Foreign Limited Liability Company?

There are several choices when forming your business, such as a corporation, limited liability company, c corporation, etc. When you are looking to create a new business, you are likely to come across lots of new terms relating to forming a business, and you might be asking ‘What is a foreign limited liability company?’

If you would like to find out about foreign limited liability companies, read on to find out more.

What is a Foreign Limited Liability Company?

A limited liability company is a business entity registered with the state that has received articles of organization from the Secretary of State. It is a business structure that is a cross between a partnership and a corporation whereby the business owner has limited liability meaning that their liability is limited to the assets they have invested in the business. An LLC has members, allocated managers, and an operating agreement.

A foreign limited liability company is the term used to describe a limited liability company operating in a state different from the one in which it is initially registered. It does not refer to a business with headquarters in another country. A domestic limited liability company refers to the state in which the company operates and is first registered. To all other states, the business is known as a foreign limited liability company.

You are likely to want to register as a foreign LLC when you plan to expand your business operations to other states. This could be to set up a new store or office in another state.

When Do You Need to Register as a Foreign Limited Liability Company?

If you plan to operate in any state other than the one you are originally registered with, you may need to register with those states as a foreign limited liability company. You should investigate this carefully for each state you wish to operate in as a foreign LLC, as different rules and legislation apply depending on the state.

What are the Risks of Not Registering as a Limited Liability Company?

By not registering as a foreign limited liability company, you could face financial penalties or fines. You could have to pay late taxes, additional fees, and interest charges. These penalties can be quite substantial. You may also not be able to file a lawsuit should the need arise if you have not registered as a foreign LLC.

Final Word: What is a Foreign Limited Liability Company?

Now you know the answer to ‘What is a foreign limited liability company?’ Once you have registered your business in the original state you can now research registration of your business as a foreign LLC in the other states you wish to operate in. You will need to go to the Secretary of State for each state you want to register as a foreign LLC.

You can find out more about the Legal Stepz courses on forming your limited liability company, incorporating your business, or trademark registration.