Foreign business registration refers to the process of doing business in another jurisdiction. A foreign business registration does not mean you will do business in another country. Even though the term might be confusing, a foreign business registration lets your company do business across state lines.
Reasons to Obtain a Foreign Business Registration
A corporation, LLC, or another type of entity cannot simply conduct business transactions in a state other than that in which it is incorporated. Companies expanding beyond their home states may be subject to the jurisdiction’s foreign qualification requirements. For instance, under New York’s LLC Act, a company must register if they are “transacting business” or “doing business” in New York.
There are many benefits to registering a foreign entity. These can include:
- Maintaining liability protection
- Availing your company of the courts in that jurisdiction
- Avoiding potential penalties
- Legitimizing your business in that jurisdiction
An entity receives no tax benefits to foreign registration. However, an entity may have securities reasons to register in another jurisdiction.
Delaware is one of the most common states in which to incorporate. The state does not impose income tax on corporations registered in the state that do not conduct business there. Delaware also has a chancery court that only handles cases involving corporations. Filings are also processed quickly in Delaware since it is corporation-friendly, and residency in the state is not required. Importantly, many investors also prefer doing business with Delaware corporations.
Wherever you register your business, foreign entity registration must be done efficiently and correctly with the Secretary of State. While register in a foreign jurisdiction to do business there, it’s also vital if you want to sue in the local courts. You can still be sued in the local courts if you don’t qualify as a foreign entity — but in order to mount a defense, you must be registered.
What is an Alien Business Registration?
Not to be confused with a “foreign” business registration, an alien registration is when an entity outside the United States registers in the country. In these cases, a company needs not only to register with the state where they wish to transact business, but they must also obtain either an International Tax Identification Number or Employer Identification Number from the Internal Revenue Service if they are employing people in the United States. Critically, this process can be complex and it is best to have the skill and knowledge of an experienced tax attorney.
When a company is registered in the United States, that alien registriation lets you open a bank account stateside, open online accounts with certain businesses, and gain access to a new market. Even when buying online, many consumers may prefer to work with local vendors due to the prohibitive costs of shipping. Incorporating in the United States can let you build your company, expand its consumer base, and boost its bottom line.
Contact an Experienced New York Business Attorney
Complex issues can arise when registering a business. It’s imperative to have a knowledgeable business law attorney by your side who can provide you with skillful advice and critical guidance. Brinen & Associates helps clients regarding a wide variety of business matters, including those involving foreign business registrations and alien business registrations. Call (212) 330-8151 or send us a message to learn more about how we can help you and your business.