Foreign Qualification in Texas
If you are based in any state in the US and want to transfer or expand your business in the “lone star” state then you will need to apply for foreign qualification in Texas. If you are wondering what foreign qualification is then it can be defined as the process by which you can register your business with the secretary of state office of the state you intend to operate in. A Texas foreign business registration will enable your company to pursue business growth opportunities legally without the need for incorporating or new business formation. This guide has been created to provide information on what Texas foreign qualification is and the requirements for different businesses.
Texas Foreign Qualification
The state of Texas is home to approximately 2.8 million small businesses including domestic and foreign entities and these businesses are considered as one of key drivers of the state’s economic growth. One of the reasons for Texas LLC foreign registration is that the state has a pro-business environment thanks to a plethora of business incentives, grants and financial assistance, skill development training programs, and Foreign Trade Zones (FTZ) among others. A Texas foreign business registration will enable you to access all state and federal incentive and business assistance programs that will not only lower the initial startup costs but also help balance long-term operating costs.
What is Texas foreign qualification?
Foreign qualification Texas refers to the registration of a new business with the office of secretary of state. Once you complete Texas foreign business registration, your company will be able to legally pursue growth opportunities in Texas (across home state borders) without having to incorporate or form a new business entity. This is normally the first step towards expanding any business to a new state.
The process of Texas LLC foreign registration or foreign incorporation may be different from that of other states and the regulations are governed by the Texas Business Organizations Code (BOC), Title 1 – General Provisions, Chapter 9 – Foreign Entities. Let’s look at an example to understand this:
If you have formed a domestic corporation in New York then this will be considered as your home state for business purposes. Now, if you plan to expand your operations to Texas then will you need to incorporate again in this state? No! You will be required to undergo the process of foreign qualification in Texas, for which you will have to submit the required forms according to the type of business with the Secretary of State pursuant to TX Bus Orgs § 9.004 (2019).
Along with the Texas foreign business registration, you will also be required to apply for and obtain business licenses or permits, provide a certification of existence, and hire and maintain a registered agent like IncParadise, so that state required annual compliances can be maintained.
Doing business in Texas
Doing business in Texas especially if your company has been formed initially in another state translates into the fact that it is a foreign company. Hence, the operation of such a company will be governed by 2019 Texas Statutes, Business Organizations Code, Title 1 – General Provisions, Chapter 9 – Foreign Entities. So what does “doing business in Texas” mean? It simply refers to the practice of transacting or conducting different business related activities in any state other than its home state or state of initial formation. When this happens, the said business has to apply for Texas LLC foreign registration or foreign incorporation.
According to the Texas Business Organizations Code, your company will be considered to be “doing business” in Texas and will be required to apply for Texas foreign business registration, if the following are applicable:
- If your business has or owns a warehouse in Texas
- If your company owns a store in the state
- If you have an office or taken commercial space for business activities
- If your company has single or multiple sales representatives in Texas
Texas Foreign Qualification Process
If you have a business and it is already operational in any other state like Wisconsin or Georgia and you are planning to expand your business in Texas then you will need to apply for Texas foreign business registration. The process varies from one state to another and filing of foreign qualification Texas application would be different for different forms of business. It is important to note that failure to register with the state can lead to civil penalty and even injunction from doing business in Texas.
Texas foreign Corporation registration
If you are planning to form a foreign corporation in Texas then you will have to file an application for registration, which was earlier known as the certificate of authority. You will have to file Texas foreign corporation registration with the office of the Texas Secretary of State. This application will ensure you are able to “transact business” in the state. The following steps will help you to identify the requirements for Texas foreign business registration.
- Name Registration: The first step towards foreign qualification in Texas is to identify a business name and check name availability. In other words, you will have to conduct a Texas foreign entity search so that you can set forth the entity name that has to be registered. After conducting the search, you will be in a position to finalize the business name. Once confirmed, you can file the “Application for Registration of an Entity Name” pursuant to Sections 5.151 to 5.154 of the Texas Business Organizations Code (BOC). The name registration is an integral part of foreign qualification process and will be effective for a period of one year unless you file a notice of withdrawal. You will also have to provide a “Certification of Existence” along with the name registration application. The fee for filing the name registration application is $40.
- Registered Agent: An important aspect of Texas foreign corporation registration is designation of a registered agent for the service of process pursuant to TX Bus Orgs § 5.201 (2019). You can hire IncParadise as your Texas registered agent as we are familiar with the process of foreign qualification and one of our top services is assisting with Texas foreign business registration.
- Certificate of Existence or Good Standing: A certificate of existence is also known as a certificate of good standing and will be issued by the home state or the state where the foreign entity was initially formed. The certificate will be issued by the office of the Secretary of State or the Tax Department of the home state. You will be required to submit the certificate of existence along with the Texas foreign corporation registration application as well as the application for name registration.
- Foreign Corporation Qualification: The final step in the Texas foreign business registration process is to file the “Application for Registration of a Foreign For-Profit Corporation” (Form-301) pursuant to TX Bus Orgs § 9.004 (2019). Some of the important information you need to provide include name of the registered agent and their registered office, Statement of Purpose, Certification of Existence, information of foreign entity’s jurisdiction of formation and incorporation date, and federal employer identification number (FEIN) among others. The application for Texas foreign corporation registration has to be submitted in duplicate along with the filing fee of $750 to the office of the Secretary of State in Austin, Texas.
Texas foreign LLC registration
If you are an owner of a limited liability company and you want to expand your business to Texas then foreign qualification is necessary. You will need to apply for Texas foreign business registration as this certificate will ensure you can legally operate in the state. There is a process for Texas LLC foreign registration and it is as follows:
- Name Registration: Choosing a business name is an important aspect of Texas LLC foreign registration. It is important to ensure your chosen name follows the name availability rules as set by Section 5.153 of the Texas Business Organizations Code (BOC). Once you have chosen a name, you need to check name availability, which means it should be a unique name and is not being used by any other business in the database of the Texas Secretary of State. Once you have conducted your Texas foreign entity search and finalized a unique name, it is time to file the “Application for Registration of an Entity Name” pursuant to Sections 5.151 to 5.154 of the Texas Business Organizations Code (BOC). The process for name registration is fairly simple although you will be required to file a “Certification of Existence” along with the application. The filing fee for name registration application is $40 and it will be effective for a period of one year unless you file a notice of withdrawal.
- Registered Agent: One of the important aspects of the process of Texas LLC foreign registration is designation of a registered agent pursuant to TX Bus Orgs § 5.201 (2019). You can hire IncParadise as your Texas registered agent as we are familiar with the process of foreign qualification and have the necessary expertise to provide service of process as required by Texas Business Organizations Code.
- Certificate of Good Standing: The Certificate of Good Standing is an important official document that certifies the existence of a company and strengthens the fact that the said company is up to date where tax filing and state annual requirements are concerned. It is known as a certificate of existence in Texas and is a mandatory requirement for Texas foreign business registration. It is important to note that the certificate of good standing will be issued by the state of where the LLC has been originally formed.
- Foreign LLC Qualification: The culmination stage in the process of Texas LLC foreign registration is to file the “Application for Registration of a Foreign Limited Liability Company” (Form-304) pursuant to TX Bus Orgs § 9.004 (2019). Some of the important information you need to provide include Certification of Existence, name of the registered agent and their registered office, Jurisdictional Information, Federal Employer Identification Number, and name and address of governing persons among others. The application for Texas foreign business registration has to be submitted in duplicate with the office of the Texas to the office of the Secretary of State along with the filing fee of $750.
Need Any Assistance in Applying for Texas Foreign Qualification?
If you have already registered a corporation or a limited liability company but want to expand your business in Texas then you will have to apply for foreign qualification in Texas. As one of the leading Texas registered agents, IncParadise can assist you with the process of Texas foreign business registration or incorporation.
We can also help you acquire a Certificate of Existence or Good Standing from your home state and provide you business specific additional services that will ensure you are in compliance with all requirements pertaining to Texas LLC foreign registration or foreign incorporation. We also provide foreign qualification services in all 50 states, which will enable you to expand your business to any state in the nation.