Do you own a limited liability company (LLC) created in a state other than Utah, but you want to expand your business to the Beehive State? If so, you’ll need to qualify your foreign LLC in order to transact business in Utah.
What is a foreign qualification and how do foreign LLCs function within the state of Utah? 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 Utah. 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 Utah 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. Utah state law does not provide a definition of “doing business” in the state, though it does outline certain exempt activities.
What Qualifies as ‘Doing Business’ in Utah
According to the state of Utah, “as the standards for ‘doing business’ are vague and often confusing, each case must be examined based on its own merits and circumstances. The Division recommends registration of a business if the exemption is not reasonably clear and identifiable.”
What Does NOT Qualify as ‘Doing Business’ in Utah
Meanwhile, Utah state law outlines numerous activities that do not qualify as “doing business.” The following activities are not considered to be “doing business” in Utah, and you do not need to qualify a foreign LLC to pursue them:
How to Get Foreign Qualification in Utah
If you want to foreign qualify your LLC in Utah, you’ll need to file a Foreign Registration Statement with the State of Utah. This can be done online, or the form can be printed out and filed in person or by mail. You will be required to provide the following information for the Foreign Registration Statement:
Filing Fee: $70, with the check made payable to the “State of Utah.”
What Is the Penalty for Not Getting Foreign Qualification in Utah?
If you operate a foreign business in Utah without first filing a Foreign Registration Statement, your business will not be able to file a lawsuit against a third party in a Utah 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 Utah 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 Utah.
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 foreign qualification in the state of Utah isn’t particularly complicated. In fact, it is significantly cheaper than the application process in most states, and confirmation is generally received within 24 hours of filing. In addition, Utah’s rules and regulations regarding which LLCs need to foreign qualify are considerably looser than many states. Still, this isn’t a process that should be overlooked or taken lightly, because the penalties for not qualifying a foreign LLC in Utah 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 Utah foreign qualification, and we wish you a prosperous business future!