Foreign Qualification in Alabama

If you are considering moving your company to other states for the sole purpose of expanding your business then you will need to understand the concept of foreign qualification. This widely used terminology can sound confusing and very international but in reality, this simply means conducting your business in any other state apart from the state of registration. Foreign qualification in Alabama is the process by which an out-of-state business can transact in this state. This guide will provide deeper insight into relevant areas pertaining to foreign qualification including Alabama foreign entity search, registering such a business, state laws, requirements, and processing fee among others.

Alabama Foreign Qualification

If you are thinking of Alabama foreign corporation registration or LLC formation then one of the first things to consider is the advantages this particular state offers. Alabama, known as the Yellowhammer State has a vibrant economy supported by a growing startup ecosystem and pro-business regulations and climate. The state is home to top industries that have experienced immense growth and development in the last decade. The list of industries include health care, automotive, education, aerospace, bioscience, banking, and other heavy industries, including mineral extraction and steel production. Once Alabama foreign business registration is complete, you will also be able to apply for small business incentive programs, state sponsored grant programs, and tax credit programs.

What is an Alabama foreign qualification?

Foreign qualification is a process specifically created by each state in the USA to enable registration of those businesses or companies that have actually been formed or incorporated in another state. The Code of Alabama states that foreign qualification in Alabama is a process by which a company from another state or jurisdiction gets an authority to transact business in this state. It is important to note that a limited-liability company, limited partnership (LP), corporation, or limited liability partnerships (LLP) will not be able to transact business in this state without this foreign qualification and may be penalized if such an entity tries to conduct their business without the required permission.

The process and requirements for Alabama foreign entity search and registration may vary from one state to another. Let’s look at an example to understand this:

Example: If you have formed a limited liability company in North Carolina by filing the Articles of Organization then it will be considered as a domestic entity. Here, North Carolina will be your home state or state of formation. Now, if you want to expand your business to Alabama then there are two options. One option is to close your existing business and register a new company in this state, which would then be considered a domestic LLC in Alabama. The second option is Alabama LLC foreign registration or foreign qualification and this will provide you with the authority to transact business in this state without closing your company in the home state or North Carolina.

Doing business in Alabama

Each state has its own law that governs what is known as doing business or conducting transactions in a specific state. A foreign qualification in Alabama will be necessary if you are doing business as permitted by the state law or what the state considers as conducting business. If your company has met those requirements as mentioned by Alabama Code then the said entity will be required to apply for Alabama foreign business registration. Generally speaking, “doing business” is defined by specific activities of an entity like maintaining a physical presence or office or having employees in Alabama.

The Alabama statutes or code states that an entity will be considered “doing business” in the state if such a company is subjected to the business privilege tax applicable in the state. In addition to this general rule, a foreign business entity will be considered to be doing business in Alabama if,

Such a company conducts a trade or business in this state
The said entity engages in commerce of any kind
The company is rendering a professional service of any type
Such an entity conducts the insurance business subject to the regulatory authority of the Alabama Insurance Commissioner
The primary activity of such a company is banking or that of a financial institution

Alabama Foreign Qualification Process

If you have registered a company in any other state and are planning to expand in the state of Alabama then your business will be considered to be a foreign entity in this state. You will then be required to apply for foreign qualification in Alabama and the process will be governed by the 2013 Code of Alabama, Title 10A; Article 7 – Foreign Entities. According to state statutes, each entity based in any other state but wanting to transact business in Alabama will need a proper authority or permission to do business, which can vary depending on the entity structure. Let us look at the process of Alabama foreign business registration for LLCs and corporations.

Alabama Foreign Corporation Registration

If you have already incorporated your company in another state and are considering expanding business operations in Alabama then you will need to apply for the process of foreign qualification. This process will initiate steps necessary for Alabama foreign corporation registration and provide you with the authority necessary for transacting business in this state. Let us understand in detail, what this process entails.

What is Alabama Foreign Corporation?

An Alabama foreign corporation is a type of entity that has been incorporated in any state other than Alabama and wants to conduct its business now in this state. Such an entity will be required to apply for Alabama foreign corporation registration.

Example: You have incorporated in Colorado by submitting Articles of Incorporation. Your company is considered a domestic entity in that state. A few years later, you want to expand your business to Alabama. Now, since the said corporation is already registered in Colorado, it will be considered as a foreign corporation in Alabama.

There are certain steps that you would need to follow including Alabama foreign entity search and registration. Let’s look at the steps involved in foreign qualification in the state of Alabama.

How to register a foreign Corporation in Alabama?

There is a specific process for Alabama foreign corporation registration and this will be different from that of incorporating a domestic entity. The various steps involved in this process are:

Name of Corporation – One of the most important parts of a foreign business incorporation is name registration or reservation. The laws, process, and fee are different for different states. An Alabama foreign corporation registration will require you to first obtain a name reservation certificate. Since a foreign entity already has a name registered in the home state, it is important to conduct an Alabama foreign entity search also known as business name availability search. This will reveal if the existing name can be reserved or not. If the name is not available then you can file a fictitious name pursuant to AL Code § 10A-1-5.11 (2020). If the existing name is available then you can opt for foreign entity name reservation filing online. There is a processing fee of $28.
Registered Agent – Whether you are forming a domestic entity or applying for an Alabama foreign corporation registration, there are certain state guidelines that are required to be followed. One such law is to continuously maintain a registered agent in the state pursuant to AL Code § 10A-1-5.31 (2013). We at IncParadise are one of the top Alabama registered agents and have helped several domestic and foreign entities to incorporate in this state.
Foreign Corporation Registration – Once you have conducted an Alabama foreign entity search and reserved or registered a business name, you will need to apply for an authorization to conduct business in this state. This authorization will be provided through the process of Alabama foreign corporation registration where you will need to submit the form – Foreign Corporation (Business Or Non-Profit) Application For Registration pursuant to AL Code § 10A-2-15.01 (2020). This application has to be submitted with the Secretary of State, Business Services along with a processing fee of $150. You can also file this application for registration online.

Once Alabama foreign business registration is complete, you can apply for the necessary business licenses in the state or city or county. You will need to maintain annual compliances in the state similar to domestic entities.

Do you want to register a foreign Corporation in Alabama?

Alabama Foreign LLC Registration

If you are already operating a limited-liability company in another state and want to expand your business or conduct your business in the state of Alabama then you have to undergo the process of foreign qualification. This process is also known as Alabama LLC foreign registration and will help you to start operations without the need for registering a domestic LLC. The process of foreign qualification of an LLC is governed by the Code of Alabama, Title 10 – corporations, partnerships, and associations, Chapter 12 – Limited Liability Company Act, Article 9 – Foreign Limited Liability Companies.

What is Alabama Foreign LLC?

Any business or company is considered to be a foreign limited-liability company in Alabama if such a company has been registered in any state other than Alabama. If such an LLC wants to conduct their business in this state then it will be required to apply for Alabama foreign business registration. Let’s look at an example to understand this.

Example: You have registered your LLC in Virginia by filing the Articles of Organization and are primarily operating in that state. Virginia will be considered to be your home state. Now, if you want to expand your business to another state like Alabama then it will be considered as a foreign entity in this new state. In such a scenario, Alabama LLC foreign registration will become necessary.

There are certain steps involved in the process of Alabama foreign business registration for an LLC. Let’s look at these steps for foreign qualification in detail.

How to register a Foreign LLC in Alabama?

A limited-liability company is a type of structure that is quite popular amongst small business owners as well as established entrepreneurs. If you have already set-up an LLC in any state and believe that expansion in Alabama will bring good returns then it’s time to apply for Alabama LLC foreign registration. This is basically a process also known as foreign qualification and will vary from one state to another according to the business statutes of the said state. There are several aspects to consider as they are integral to Alabama foreign business registration. Let us take a look at the important requirements that are governed by the state laws:

Name of LLC – One of the foremost requirements of Alabama LLC foreign registration is identifying a business name. Since your limited liability company is already operational in another state, hence it is recommended that you conduct a name availability search for the existing name. An Alabama foreign entity search will reveal whether your existing name is unique in this state or is already in use. If the said name is unavailable then you will need to file a DBA also known as a fictitious name or a trade name pursuant to AL Code § 10A-1-5.11 (2020). If the existing LLC name is available then you will need to reserve it with the office of the Secretary of State by filing foreign LLC application for registration.
Registered Agent – The second most important aspect of the foreign qualification process is hiring a registered agent in the state. This is mandatory as they are responsible towards executing service of process. Alabama LLC foreign registration will not be possible or valid if your company doesn’t have a registered agent in the state. Alabama registered agent services offered by IncParadise will not only help fulfill state requirements like service of process but also assist with other annual compliances like filing of annual reports.
Foreign Registration Statement – Once you have reserved or registered an LLC business name, the final step in this process will be to apply for permission or authorization to conduct business in this state. In order to receive this authorization, you will have to file Foreign Limited Liability Company (LLC) Application for Registration form pursuant to section 10A-1-7.04, Code of Alabama 1975. The application for Alabama foreign business registration has to be submitted with the Secretary of State, Business Services along with a processing fee of $150. You can also file foreign qualification applications online.

Once Alabama LLC foreign registration is complete, you will be required to apply for and obtain business licenses necessary to operate in this state. You will also be required to maintain annual compliances.

Want to form a foreign LLC in Alabama?

Need Any Assistance in Applying for Alabama Foreign Qualification?

Alabama with its pro-business regulations, robust infrastructure, good business climate, and vast resources provides necessary support to new businesses as well as foreign entities. Once you have registered your company in the state through foreign qualification in Alabama, you will also be able to participate in state governed business incentive programs. As one of the leading registered agents in Alabama, IncParadise can provide meaningful assistance towards Alabama foreign business registration.

We provide several other business related additional services in Alabama that will help in fulfilling annual compliances as required by any foreign entity like getting an EIN tax ID. We also provide foreign qualification services in all 50 states.