Can I incorporate in one state while having my business based in another state?

Yes, you may, but it’s not always advantageous. Unless you are a corporation or an LLC doing business in multiple states, it’s usually better to file your Articles of Incorporation in the same state you base your operations.

Domestic and Foreign Corporations

These terms confuse many new business owners, and it’s important to clarify the differences between a domestic and foreign corporation.

Domestic corporations are those businesses who filed their original Articles of Incorporation with the secretary of state’s office it the same state where they primarily conduct their business activities.

These activities include:

  • Purchasing materials
  • Manufacturing products
  • Sale of goods to consumers
  • Provide services
  • Construction or skilled trade work

A foreign corporation may also perform these tasks, but have filed their Articles of Incorporation with another state. Operating in another state makes this corporation a foreign entity regardless of the country of origin.

Limits on Foreign Business

Do not assume that you automatically have all the same rights as a foreign business. Foreign corporations must file additional paperwork when doing business in multiple states and contend with the laws of both state governments.

The laws vary, but you must qualify with the Secretary of State’s office. This process typically requires additional documentation and fees. Your business must also pay the additional state income taxes for any profits you make in the foreign state.

A corporation or LLC out of state is usually at a disadvantage. Unregistered foreign businesses may not sue in court and may not receive legal protection from competitors.

Structure Your Business for Success

If you are just starting out and plan to do business in only your home state, it’s usually best to just organize your business in the same state you plan to conduct your primary business activities. Larger organizations with business in multiple states must already pay and file as foreign corporations.

GovDocFiling can help you organize your business with the appropriate filings and paperwork to ensure your company gets the support from the government it needs. Start your LLC online filing and learn how to get federal tax ID recognized in all states.

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