When a company formed out of the state wants to expand its activities to Florida, state law requires registration as a “foreign business.” One of the most common business structures used by many entrepreneurs is the limited liability company (LLC).
Therefore, it is not unusual to find hundreds of applications of LLCs established out of the state that decided to do business in Florida. In this article, you will discover what a foreign LLC is in Florida.
What is a Foreign LLC in Florida? – Key Elements
Nationwide, any limited liability company (LLC) looking to expand its business activities to another state besides the one it was originally formed in will likely need to obtain proper certification.
In Florida, any company formed out of the state must register as a “foreign business” to do business within state jurisdiction.
Although it may sound like the term “foreign” refers to a company formed abroad, the term specifically describes a company formed in the United States, that is transacting business in a state other than the home state where it was originally established.
In this regard, out-of-state LLCs must register as foreign LLCs in Florida to ensure they meet the regulatory and tax requirements.
When Should an LLC Register as a Foreign Business in Florida?
Florida Statutes §607.1501 (1) establishes that “a foreign corporation may not transact business in this state until it obtains a certificate of authority from the department.” Therefore, if a company was originally formed in one state, that entity cannot “transact business” in Florida without proper registration.
Florida statutory rules do not expressly define what “transacting business” is. Instead, the regulations provide a non-exhaustive list of activities that may not be considered as “transact
Accordingly, Florida Statute §607.1501 (2) state that “the following activities, among others, do not constitute transacting business within the meaning of subsection (1):
- Maintaining, defending, mediating, arbitrating, or settling any proceeding
- Carrying on any activity concerning the internal affairs of the foreign corporation, including holding meetings of its shareholders or board of directors
- Maintaining accounts in financial institutions
- Maintaining offices or agencies for the transfer, exchange, and registration of securities of the foreign corporation or maintaining trustees or depositaries with respect to those securities
- Selling through independent contractors
- Soliciting or obtaining orders, whether by mail or through employees, agents, or otherwise, if the orders require acceptance outside this state before they become contracts
- Creating or acquiring indebtedness, mortgages, or security interests in real or personal property
- Securing or collecting debts or enforcing mortgages or security interests in property securing the debts, or holding, protecting, or maintaining property so acquired
- Transacting business in interstate commerce
- Conducting an isolated transaction that is completed within 30 days and that is not one in the course of repeated transactions of a like nature
- Owning and controlling a subsidiary corporation incorporated in or limited liability company formed in, or transacting business within, this state; or voting the shares of any such subsidiary corporation or voting the membership interests of any such limited liability company, which it has lawfully acquired
- Owning a limited partnership interest in a limited partnership that is transacting business within this state, unless the limited partner manages or controls the partnership or exercises the powers and duties of a general partner
- Owning, protecting, and maintaining, without more, real or personal property”
As it is plain to see, determining whether an LLC formed out of the state must register as a foreign business requires expert legal guidance.