Qualifying a Wyoming LLC to Conduct Business in Another State

It is important to note that, although you can form your LLC in Wyoming, if you will be transacting business in another state, you must qualify your LLC to conduct business in that state. What constitutes “transacting business” varies slightly from state to state. Wyoming excludes the following activities and allows you to perform them in this state without obtaining a certificate of authority:

·         Maintaining, defending or settling any proceeding;

·         Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs.

·         Maintaining bank accounts;

·         Maintaining offices or agencies for the transfer, exchange and registration of the corporation’s own securities;

·         Selling through independent contractors;

·         Creating or acquiring indebtedness, mortgages and security interests in property;

·         Owning, without conducting a trade or business, real or personal property;

·         Conducting an isolated transaction that is completed within thirty (30) days and that is not one in the course of repeated transactions of a like nature; or

·         Transacting business in interstate commerce.

Additionally, an entity that serves as the organizer, manager or member of a company in Wyoming is not required to obtain a certificate of authority in order to fulfill these duties. Know that these rules do change so it is best to check ahead of time.

If you are transacting business in another state, qualifying to conduct busines in that state is a relatively simple process that usually requires the following steps: (1) register the LLC’s name with the foreign secretary of state, (2) retain a registered agent for service of process in the foreign state, (3_ obtain a certificate of qualification or good standing from the Wyoming Secretary of State (or whatever state you are incorporated or organized under), and (4) pay filing fees in the state where it conducts business. Your entity name must also be available in the state in which you are registering as a foreign entity, otherwise you will have to adopt a fictitious name in order to conduct business in that state.

While it is a rule of every state that a foreign entity (foreign is what you are called if you were organized or incorporated in a different state) must obtain a certificate of authority to transact business in that state, the failure to do so will not likely impair the validity of your corporate acts in that state. At least, that is the rule in Wyoming. However, if you are found to be conducting business in Wyoming without being registered you will be subject to a fine of $5,000.00 plus expenses and any fees or licenses taxes that you would have incurred with an interest rate of 18% tacked on. Additionally, your entity cannot maintain any lawsuits in the state, which is not a favorable position to be in.

Prudence dictates that you qualify your Wyoming LLC in any state in which you conduct an active trade or business. Beware of promoters who claim that by incorporating in Wyoming you can avoid, for example, California’s minimum $800.00 franchise fee and all of California’s business taxes. If you do business California, that advice will get you into trouble. If your Wyoming LLC does business in another state, you are best advised to qualify in that state. That said, by forming in Wyoming and qualifying in your home state, you still have the benefits of Wyoming corporate law and are not paying any extra Wyoming taxes (since there aren’t any) for this benefit.