Do you own a limited liability company (LLC) created in a state other than Massachusetts, but you want to expand your business to the Bay State? If so, you’ll need to qualify your foreign LLC in order to transact business in Massachusetts.
What is a foreign qualification and how do foreign LLCs function within the state of Massachusetts? 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 Massachusetts. 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 Massachusetts 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, Massachusetts state law does define exactly what qualifies as “doing business” in the state.
What Qualifies as ‘Doing Business’ in Massachusetts
According to Massachusetts state law, the following activities qualify as “doing business” in the state:
What Does NOT Qualify as ‘Doing Business’ in Massachusetts
Meanwhile, the following activities are not considered to be “doing business” in Massachusetts, and you do not need to qualify a foreign LLC to pursue them:
How to Get Foreign Qualification in Massachusetts
According to the Massachusetts Secretary of State, “a foreign corporation must file a certificate of registration within 10 days after it starts to transact business in the commonwealth. A certificate of legal existence or good standing issued by an authorized officer or agency in the jurisdiction of organization shall accompany the certificate of registration.” This form can be printed off and submitted to the Secretary of State’s office. It will require the following information:
Filing Fee: $500, with the check made payable to the “Secretary of the Commonwealth.”
What Is the Penalty for Not Getting Foreign Qualification in Massachusetts?
There are two major penalties for failing to qualify a foreign LLC in Massachusetts. First, your business will not be able to file lawsuits against a third party in a Massachusetts court. And second, your business could be liable for penalties of up to $500 per year.
Should I Hire a Business Service Provider to File My Massachusetts 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 Massachusetts.
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.
The process for getting foreign qualification in the state of Massachusetts isn’t too complicated, but it is significantly more expensive than most other states. However, the penalties for not registering as a foreign entity could potentially be much more expensive in the long-term. In short, this is not a process that any business can take lightly. The penalties for not qualifying a foreign LLC in Massachusetts can be severe in some cases ― especially if you have been doing business as an unregistered foreign entity for an extended period of time.
We hope this article managed to answer your questions about obtaining a Massachusetts foreign qualification, and we wish you a prosperous business future!