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).
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