Do you own a limited liability company (LLC) created in a state other than Indiana, but you want to expand your business to the The Hoosier State? If so, you’ll need to qualify your foreign LLC in order to transact business in Indiana.
What is a foreign qualification and how do foreign LLCs function within the state of Indiana? In this guide, we’ll answer these questions and more.
Guru Tip: If you’d rather hire an online service to handle this process for you, many of the best LLC services can handle it for you.
What Is a Foreign Qualification?
A foreign qualification enables your limited liability company to do business in the state of Indiana. It doesn’t matter which state you originally formed your business in ― or in other words, the state your domestic LLC is located in ― as the qualification process to register a foreign LLC in Indiana is the same regardless of where your domestic LLC is based.
The confusion surrounding foreign qualification usually centers on what it means to “do business” in a state outside of your primary state. This gets especially problematic considering some states don’t strictly define what it means to transact business in that state. However, Indiana state law does not define exactly what does and does not qualify as “doing business in the state”.
What Qualifies as ‘Doing Business’ in Indiana
Generally, you will need to form a foreign LLC if you have a commercial address or sales representative in Indiana, however, there are exceptions. You may need to consult the Indiana Secretary of State’s office to find out if your business qualifies. Since there is no clear definition of “doing business” in Indiana, each business’ status is determined on a case-by-case basis.
What Does NOT Qualify as ‘Doing Business’ in Indiana
Though Indiana does not define the term, it does provide a list of activities that do not qualify. The following activities are not considered to be “doing business” in Indiana, and you do not need to qualify a foreign LLC to pursue them: Maintaining, defending, or settling any court proceeding Holding meetings Maintaining bank accounts Maintaining offices or agencies for the transfer, exchange, and registration of the entity’s own securities Selling through independent contractors Soliciting or obtaining orders, if the orders require acceptance outside the state before they become contracts Owning real or personal property Conducting an isolated transaction that is completed within 30 days Transacting business in interstate commerce It’s important to note that many states include “making loans or otherwise creating or acquiring indebtedness, mortgages, and security interests in real or personal property” as an exempt activity. However, Indiana is unique in that it does consider this activity to qualify as “doing business.”
How to Get Foreign Qualification in Indiana
If you want to foreign qualify your LLC in Indiana, you’ll need to file a Foreign Registration Statement with the Secretary of State’s office. This form can be printed out or filed directly online from this link. Additionally, you must include a Certificate of Existence with your application. This can be acquired from the proper authorities in the state in which your business was formed, and must be certified within 60 days of filing the Foreign Registration Statement. The information required in the Foreign Registration Statement includes:
Filing Fee: $125, with the check made payable to the “Secretary of State.”
What Is the Penalty for Not Getting Foreign Qualification in Indiana?
There are two major penalties for failing to qualify a foreign LLC in Indiana. First, the business would be liable for a civil penalty of up to $10,000. Potentially much more damaging is the second penalty, which is that your business will not be allowed to maintain a proceeding in the Indiana court system without a Certificate of Authority. However, an unregistered foreign entity can still defend itself against lawsuits and all contracts formed in the state remain valid.
Should I Hire a Business Service Provider to File My Indiana Foreign Qualification?
If you don’t want to handle your foreign qualification on your own, you have options. Some entrepreneurs choose to hire a lawyer to prepare and file their Certificate of Authority, which can be a good option if you’re concerned about getting the job done right. However, attorney’s fees can be quite expensive.
The other option is to hire a business service provider like Incfile or ZenBusiness to register your foreign LLC with the state of Indiana.
These companies can typically get your foreign qualification done for a fraction of the price of an attorney. This is our preferred route if you don’t want to go with the DIY option.
Getting foreign qualification in the state of Indiana isn’t very difficult or time-consuming, though the process for obtaining a Certificate of Existence in the home state of your business can vary by location. Still, this isn’t a process that any business can afford to take lightly, because the penalties for not qualifying a foreign LLC in Indiana can be severe ― especially if your business is faced with the maximum civil penalty of $10,000.
We hope this article managed to answer your questions about obtaining an Indiana foreign qualification, and we wish you a prosperous business future!