If you do business outside of the state in which you are organized (e.g., you are a Wisconsin LLC, but do business in Illinios), you have to tell that other state that you are doing business there. That is, you register as a foreign company. Yup, it is as you always suspected, those Illinois people are foreigners. A foreign company may not transact business in this state until it obtains a certificate of registration from the Wisconsin Department of Financial Institutions. Most states have statutes saying the same thing. Some have even more restrictions whether or not a company can do business within their state. For example, California doesn’t allow LLC’s do certain types of business in the state.
Because each state is a bit different, let’s look at Wisconsin’s requirements for foreign companies. First, it assumes a company is doing business unless it fits an exception. Activities that do not constitute transacting business in Wisconsin include but are not limited to:
- Maintaining, defending or settling any civil, criminal, administrative or investigatory proceeding.
- Holding meetings of its members or managers or carrying on any other activities concerning its internal affairs.
- Maintaining financial institution accounts.
- Maintaining offices or agencies for the transfer, exchange and registration of the foreign limited liability company’s own securities or interests or maintaining trustees or depositories with respect to those securities or interests.
- Selling through independent contractors.
- Soliciting or obtaining orders, by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts.
- Lending money or creating or acquiring indebtedness, mortgages, and security interests in property.
- Securing or collecting debts or enforcing mortgages and security interests in property securing the debts.
- Owning, without more, property.
- Conducting an isolated transaction that is completed within 30 days and that is not one in the course of repeated transactions of a like nature.
- Transacting business in interstate commerce.
- Owning a controlling interest in a company that is transacting business in this state.
- Being a limited partner of a limited partnership that is transacting business in this state.
To register in Wisconsin is actually pretty simple. For a LLC, they simply need to file a Foreign Limited Liability Company Application for Certificate of Registration. To do so, they can file online with the following information:
- Name of Foreign Limited Liability Company, plus fictitious name if required.
- State or country under whose law they are organized and original date of organization
- Name of Registered Agent in Wisconsin
- Street Address for Registered Agent in Wisconsin
- Street Address of Principal Office
- Email Required
- Contact information, for this filing, including email address so DFI may send the Certificate of Registration
- Payment of Filing Fee: $100 (plus additional penalty for late registration if applicable)
What does this mean for you? Well, if you are doing business in another state, you will want to know if you need to register there (or even can do business there!). The small fee up front could save you quite a bit of problems later if you are not registered (see the comments above about additional penalties not to mention liabilities).