How to get Foreign Qualification in Rhode Island (2022)

Do you own a limited liability company (LLC) created in a state other than Rhode Island, but you want to expand your business to the Ocean State? If so, you’ll need to qualify your foreign LLC in order to transact business in Rhode Island.

What is a foreign qualification and how do foreign LLCs function within the state of Rhode Island? 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 Rhode Island. 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 Rhode Island 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. Rhode Island state law does not define “doing business” in the state.

What Qualifies as ‘Doing Business’ in Rhode Island

While Rhode Island does not provide a definition of “doing business,” in general, you will need to form a foreign LLC in Rhode Island if your business pursues any of the following activities:

Having a commercial domicile in the state
Having one or more individuals performing services in the state
Directing activities at Rhode Island customers for the purpose of selling them goods or services
Deriving income from, or attributable to, sources within this state

What Does NOT Qualify as ‘Doing Business’ in Rhode Island

Meanwhile, according to Rhode Island 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:

“Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement of the suit or the settlement of claims or disputes.
Holding meetings of its directors or shareholders or carrying on other activities concerning its internal affairs.
Maintaining bank accounts.
Maintaining offices or agencies for the transfer, exchange, and registration of its securities, or appointing and maintaining trustees or depositaries with relation to its securities.
Effecting sales through independent contractors.
Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where the orders require acceptance outside of this state before becoming binding contracts.
Creating, as borrower or lender, or acquiring indebtedness or mortgages or other security interests in real or personal property.
Securing or collecting debts or enforcing any rights in property securing the debts. “(9) Transacting any business in interstate commerce.
Conducting an isolated transaction completed within a period of thirty (30) days and not in the course of a number of repeated transactions of like nature.
Acting as a general partner of a limited partnership which has filed a certificate of limited partnership as provided in § 7-13-8 or has registered with the secretary of state as provided in § 7-13-49.
Acting as a member of a limited liability company which has registered with the secretary of state as provided in § 7-16-49.”

How to Get Foreign Qualification in Rhode Island

If you want to foreign qualify your LLC in Rhode Island, you’ll need to file an Application for Registration by a Limited Liability Company with the Secretary of State. This form requires the following information:

Business name
State of formation
Date of formation
Name and address of Rhode Island registered agent
Mailing address
Name and address(es) of LLC member(s)
Certificate of Good Standing dated within 60 days of filing (must be obtained from the state of formation)
Signatures of LLC manager and registered agent

Filing Fee: $150, with the check made payable to the “Secretary of State.”

What Is the Penalty for Not Getting Foreign Qualification in Rhode Island?

If you fail to qualify a foreign LLC in Rhode Island, you will not be able to file a lawsuit against a third party in a Rhode Island court. 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 Rhode Island 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 Rhode Island.

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.

Conclusion

The process for getting a foreign qualification in the state of Rhode Island isn’t particularly complicated compared to some other states. The form is simple and the process generally takes a few weeks. However, you will need to obtain a Certificate of Good Standing from the state in which your business was formed, which can lengthen the process. Still, this isn’t a process that should be overlooked or taken lightly, because the penalties for not qualifying a foreign LLC in Rhode Island 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 Rhode Island foreign qualification, and we wish you a prosperous business future!

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