Do you own a limited liability company (LLC) created in a state other than Mississippi, but you want to expand your business to the Magnolia State? If so, you’ll need to qualify your foreign LLC in order to transact business in Mississippi.
What is a foreign qualification and how do foreign LLCs function within the state of Mississippi? 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 Mississippi. 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 Mississippi 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. Mississippi state law does not provide a definition of “doing business” in the state.
What Qualifies as ‘Doing Business’ in Mississippi
Without a clear definition of “doing business,” foreign entities are evaluated on a case-by-case basis. However, in general, you’ll need to form a foreign LLC in Mississippi if your business pursues any of the following activities:
Additionally, Mississippi state law provides the following stipulation regarding foreign entities:
What Does NOT Qualify as ‘Doing Business’ in Mississippi
Meanwhile, according to Mississippi state law, the following activities are not considered to be “doing business,” and you do not need to qualify a foreign LLC to pursue them:
How to Get Foreign Qualification in Mississippi
If you want to foreign qualify your LLC in Mississippi, you’ll need to file an Application for Registration on the Secretary of State’s website. The information required in the Certificate of Authority includes:
Filing Fee: $250
What Is the Penalty for Not Getting Foreign Qualification in Mississippi?
If your company conducts business without obtaining a Certificate of Authority, your business will not be able to bring a lawsuit against a third party in a Mississippi court. However, you can still defend against lawsuits. While many states institute fines and penalty fees for operating as an unregistered foreign entity, Mississippi does not. Nonetheless, this means that individuals and businesses could fail to honor contracts with your business, and you wouldn’t be able to do anything about it legally.
Should I Hire a Business Service Provider to File My Mississippi 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 Mississippi.
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 a foreign qualification in the state of Mississippi isn’t particularly complicated compared to some other states. In addition, Mississippi’s rules and regulations regarding which LLCs need to foreign qualify are considerably looser than many states. Still, this isn’t a process that can be taken lightly, because the penalty for not qualifying a foreign LLC in Mississippi can be severe ― especially if someone you do business with doesn’t live up to their end of a contract and you’re unable to sue them.
We hope this article managed to answer your questions about obtaining a Mississippi foreign qualification, and we wish you a prosperous business future!