Foreign Entity Registration: What Every Multi-State Business Should Know

What You Need to Know:

• • Maintaining an office, employing workers, or leasing property in another state will almost certainly require your company to register as a foreign entity, while purely virtual or internet-based activities typically fall within the MBCA’s safe harbors for interstate commerce and out-of-state order acceptance.

  • Under door-closing statutes adopted in virtually every state, an unregistered foreign entity may be barred from filing suit to enforce its contracts or pursue claims in that state’s courts until it cures the deficiency, potentially exposing the company to back fees, penalties, and interest as well.

  • A company may fall within the registration safe harbors and have no obligation to register with the Secretary of State, yet still owe state sales tax. Both obligations require independent analysis.